More on higher ed funding

Following up on my post from yesterday about higher education funding, I’d like to discuss this article from William G. Bowen and Michael S. McPherson from last week at Vox. I think it is quite representative of the wonky, centrist view—dare I say consensus—that casts the student pays model as a self-evidently “right” approach.

There are many illuminating points in the article. In particular I am quite receptive to their “proposals for reform”: briefly, work to improve graduation rates, reform PhD programs to reduce the oversupply of PhDs relative to academic jobs, professionalize teaching faculty to address the outrageous reliance on mistreated adjunct faculty, and consolidate some small colleges to avoid costly duplication of administrative spending. I think these are excellent starting points for a healthy debate.

But nevertheless I would like to strongly object to the characterization of the funding debate that runs through the first half of the article. I’ll pull a few excerpts that I believe get it wrong on the student pays versus society pays debate.

First, a few excerpts from my least favorite part of the article, subtitled “Free tuition is no solution to the most serious problems we face”. Actually, before we start I should point out that “free tuition” is a misleading term: someone certainly pays for the student to be educated. What is in question is who pays at the time of the student’s education.

With apologies to Bernie Sanders and Hillary Clinton: Tuition-free college is way less help than some people need and way more than others require. Free tuition won’t let a single mom quit her job and go to college full time (the path that would afford her the best odds of finishing), nor will it permit the young Native American from an impoverished family to go away to State U instead of staying home to earn money to help out at home.

Disadvantaged students need substantial help with living expenses as well as with covering their tuition.

I think that reducing the opportunity cost for people who face the most obstacles to education is a good thing. I don’t think that reducing the opportunity cost to zero is necessary for a policy to be valuable—and, of course, that would be impossible. A person could always be doing something other than studying.

Meanwhile — an oft-repeated point still worth stressing— there is surely no reason why Donald Trump’s children, or Chelsea Clinton’s, ought to go to college for free. But there is also no reason why a two-earner, one-child family generating a combined income of $110,000 a year (well above the national average) should not be expected to contribute at least a couple of thousand dollars a year to their child’s education. We are all in this together.

This argument is a mess. I have a serious problem with the suggestion that high income families are not “contributing” to their child’s education under a society pays model. The clue is in the name: society pays. This hypothetical family contributes through general taxation to the public purse. Under the society pays model, they are contributing not just to their own child’s education, but to the education of all public college students. Even better, their contributions are not contingent on happening to at some moment have a child of college-going age. They are part of a social commitment to higher education for all children.

The claim, then, that a family does not contribute to higher education funding unless we adopt the student pays model is completely wrong. The individualism implicit this claim is a defensible position—not one I happen to agree with, but defensible—but the claim itself does not make sense.

For the authors of the article to attempt to justify their student pays argument by saying that “we are all in this together” is a shocking inversion of reality. Society is the thing that we are all in together. The individualist model cannot aspire to the same social commitment that the society pays model embodies.

The availability of a zero-tuition option in higher education is a blunt instrument, I agree. Not that I would expect the most privileged members of society to take advantage of that option, since they have plenty of very expensive, prestigious private institutions to choose from. But I think it is exactly backwards to suggest that publicly funded zero-tuition is equivalent to high income households getting something for nothing. Rather it embodies the age-old principle of public support and investment being funded by people according to their ability to contribute, and consumed by people according to their need.

The authors continue:

If we want our least advantaged people to have a decent shot at success, we all need some restraint in asserting our privileges. Moreover, there is no reason why students themselves, who stand to reap significant benefits from investing in education — the average bachelor’s graduate aged 25 to 29 makes about $20,000 more per year than the average high school graduate of the same age, and the gap continues to grow with age — should not repay a portion of the cost through loans once they enter the workforce.

This continues the mistake. Under the society pays model, the graduates in question of course are contributing to the funding of education, just as the hypothetical family in the previous passage are. The wage premium they earn means they are contributing more to the public purse. Again the distinction is that their contribution is not tied to their own account, but tied to the public good. They do not wash their hands of the funding of education when they write their last tuition check or repay the last dollar of loans, but instead continue to share in the funding of the education system.

By the way, a side effect of the society pays model, one that I find positive but others may reasonably dislike, is that incentives of this hypothetical graduate after graduation are distorted less than under the student pays model. This person would probably like higher wages, all else equal. But under society pays, their incentive to seek the highest paying job possible is unchanged from its inherent level, where under the student pays model their choice is biased towards higher wages since they have the pressure of debt. This plausibly distorts their choices further away from potentially lower paid careers like public service, entrepreneurship, and research, and further towards whatever occupations are at that moment being most rewarded by the market.

This covers my main objections to the article, which I think generalize to the broader debate over what is means to choose between society pays and student pays. There are good arguments for and against both, but the idea that people are not contributing to their own education or that of their children under society pays is just not true. They are doing even more than that by contributing in a long-term and sustainable way to the system that educates them or their children.

There is a fallacy, an unfortunate fiction, in the discussion of the funding of pensions, social security and the like that I have written about at Hippo Reads. The fiction is that retirement income is equivalent to a savings account that is personal to me. Even under a private pension model, my ability to transform my pension pot to consumption depends on the amount of stuff to go around in the economy. The “deep” issue underneath any of the policy details is what we, as a society, think is the appropriate way to divide our national income between the working and the retired.

I would hate to see the goalposts similarly moved on the higher education funding debate. Funding education, as funding pensions, is at least in part an inherently collective decision. Those who are in education are usually working less than they otherwise would, and often not working at all. This has a social cost in terms of lost output and productivity. But we accept that this is a cost not just worth paying, but one that it is necessary to pay.

I believe that giving citizens the support of society in laying a publicly funded option for quality higher education is an invaluable part of the social contract. It is meaningful symbolically and practically, and it does not mean that people are not paying their “fair share”.

One thought on “More on higher ed funding

  1. Pingback: Thoughts on the NLRB grad student unionization ruling | Jim Campbell

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