Submitted by Don Francis on September 11, 2015 - 3:00am
On the presidential campaign trail, we’re seeing one so-called progressive candidate after another call for the federal government to enact major new spending programs to hold down tuition at public universities. Here’s the thing -- the results would be regressive: the prime beneficiaries of these proposals will be wealthier students who currently do not receive means-tested federal dollars.
Let me confess: I have spent the last 24 years of my life representing private colleges and universities in the Pennsylvania General Assembly and to the Pennsylvania congressional delegation. Because of that I know that the private four-year colleges and universities in Pennsylvania enroll a similar proportion of Pell Grant recipients as are enrolled at our state’s public universities, 24 percent versus 30 percent. I also know that with a few exceptions the average family income of students attending our name-brand public universities exceeds or approximates that of our private college and university students.
I get the politics of the candidates’ proposals. I understand that families are worried about paying for college. I understand that some students assume too much debt (though the average debt assumed for an undergraduate degree is a very worthwhile investment that returns far more value than a comparable loan for a new car). I understand that promising people they can attend a public university debt free is a popular political statement intended to help win an election. But let’s at least call this what it is: a cynical political proposal that is regressive in its use of government dollars to benefit upper-middle- and upper-income families.
I would like to believe that these “progressive” candidates are poorly informed about the realities of higher education finance and don’t realize that public colleges and universities for decades have been using their state-subsidized price advantage, their athletic programs and their investment in more amenities and “star” research faculty to become more selective and enroll higher and higher-income students. The correlation between income and test scores has been demonstrated repeatedly. In general, the more selective institutions become, the higher the family income of the students who attend.
Consequently, if you provide additional federal and state aid to a select group of public institutions and to the disadvantage of the private institutions with which they compete, then the government-favored institutions will ultimately become more popular, will have more students to choose from and will select the highest performers. From an institutional perspective, you are simply using your place in the marketplace to strengthen the quality of your institution by recruiting better students and making your faculty and alumni very happy. Perfectly reasonable approach for the institutions.
From a public policy perspective, however, this has many unfortunate consequences if your goal, as a country, is to increase access to quality higher education for low-income students or students who need extra preparation to make it through college.
First, those subsidies meant to make the public university more affordable will actually make it more difficult for lower-income and underrepresented students to gain admission, as they must compete with higher-income students (many of whom now attend private universities) seeking the generous government subsidy.
Second, these new federal and state government subsidies devoted to public universities will certainly result in the loss of students and tuition income at the vast majority of private colleges and universities. A relatively few private colleges and universities have enough wealth and national reputation to compete with an even larger government subsidy at the public universities. Many private colleges could be forced to close their doors if enrollment drops. Private institutions are performing a very important public service by educating hundreds of thousands of Pell Grant students each year -- 58,882 in Pennsylvania alone in 2012-13. If these institutions disappear, who is going to educate these low-income students? Not only will they struggle to get into some of the public universities, but many will struggle academically if they do get in, because the larger size and anonymity of public universities will make the learning environment less conducive for success.
Finally, all we have to do is to look at what happened the last time the federal government demanded that the states maintain their funding for the public universities to see how low-income students were hurt. As part of the stimulus package intended to shorten the 2007-8 recession, Congress required that states maintain funding to their public universities in order to receive federal stimulus dollars. As a result of this policy, several states -- including mine -- reduced their spending on need-based aid. Yes, upper-income students who didn’t receive need-based state grants received help through this increased government support to hold their tuition down. But the low-income students attending these same public universities saw their need-based grants cut and had to pay more for their college education.
These are regressive, not progressive policies.
In praising these “debt free” public university initiatives, one former Obama adviser spoke dismissively of vouchers for students, saying that the federal government needed to give money directly to public institutions. I believe that using institutional funding instead of vouchers to students (Pell Grants and state need-based aid programs) guarantees that taxpayer money will be wasted on those without need, while many with need will be left behind even further than they are today. Would a progressive even consider eliminating means-tested food stamps and replacing them with publicly subsidized grocery stores for all who want the government subsidy? Even worse, would they do this knowing that these grocery stores don’t have to allow all people to come in? In fact, that many of these grocery stores generally serve a population whose family income exceeds the national average?
Providing federal dollars to states to help subsidize low tuition at the public universities is a great idea if your ultimate goal is to pander to the public’s desire to have someone else pay for what is one of the most costly investments you can make in yourself or the members of your family.
However, it is also one of the most regressive economic stances you can take when put into practice, and we should stop pretending there is anything progressive about these proposals. Populist maybe, but not progressive.
Don Francis is president of the Association of Independent Colleges and Universities of Pennsylvania.
Employment and unemployment rates, much more than the number of high school graduates or other population trends -- which are important over time but very slow moving -- are the biggest factors driving enrollment for community colleges, for-profit colleges and some open-access four-year institutions.
Selective public and private colleges can control the size of their incoming classes by tinkering with admission criteria, and they tend to draw students whose decision is not whether to attend college but where. But community colleges accept anyone with a high school diploma who wants to enroll, and the size of that potential market varies depending on what the alternatives are.
For low-income students, especially at colleges where tuition is low and often covered by financial aid, the biggest cost of college is the opportunity cost -- the money a student could have earned by working instead of going to school.
In times of high unemployment, that cost for many is zero, and however hard someone might be struggling to make ends meet, going to college doesn't necessarily make it any harder. (Whether they can succeed in college without enough money for food or rent is the real question.)
But when unemployment is low and jobs are relatively plentiful, the choice to enroll is also the choice to leave money on the table, money students may need in the short term to cover basic necessities.
In that case, working in the short term also has its own long-term opportunity cost -- in the higher lifelong earnings available to college graduates.
For middle- and higher-income students, it is easy to choose the much greater long-term benefit over the short-term prospect of poor wages in a low-skill job. But for those with no savings or support from family members, and who may be supporting others with their income as well, work may seem like the only viable option.
So it is not surprising that when unemployment goes up, community college enrollments tend to spike, and when unemployment goes down, enrollments drop. (See image below.)
For every 1 percentage point change in the unemployment rate from May to May, community colleges can expect a 2.5 percent change (up or down) in fall full-time enrollment.
For this fall, if the past is any indication, the 0.8 percentage point drop in unemployment from 2014 to 2015 should translate into between a 1 and 3 percent enrollment decline. Regions hitting a rough patch -- say, the energy-producing areas of the country -- may see the opposite trend.
But with states, institutions, philanthropic organizations and the federal government all working to improve college access and attainment, perhaps one day this correlation will weaken, and low-income students will be able to make the kinds of long-term trade-offs and choices for the future that their better-off counterparts have always found so easy.
Nate Johnson is a higher education researcher and principal of Postsecondary Analytics, LLC.