Tuesday, December 02, 2014

 

Mind the Gap: A Response to Ben Wildavsky


Is it fair to offer operating subsidies to public colleges that allow pricing tuition below cost for all students, even the most affluent?  Should even the wealthier students get discounts?

Ben Wildavsky says no.  I say yes.  

Wildavsky does a nice job laying out the core of his position.  He argues that raising tuition at state colleges and universities would contribute to economic growth.  The argument runs something like this: the payoff to college is getting so great that nearly everybody who can afford to go, will go.  The upper middle and upper classes will send their kids as a matter of course.  Therefore, any subsidy directed to them - such as through pricing below cost - is basically throwing money at people who don’t need it.  Liberating those funds from those who don’t need the money will allow states to redirect that money to needier students, who often struggle to complete their studies because of financial issues.  Therefore, redirecting subsidies from where they’re redundant to where they would matter more will result in more low-income students graduating and becoming more economically productive citizens.

It’s a well-written piece, but it makes the common mistake of ignoring both institutions and politics.  Yes, it’s easier to construct theoretically elegant models if you leave out institutions and politics.  It’s also easier to construct flying trains if you leave out gravity. If you want your solution actually to fly, you have to take account of those sticky, messy, conflictual spaces that reflect multiple and competing agendas.

For example, nothing in Wildavsky’s analysis acknowledges that the public institutions that currently come the closest to his model -- the flagship research universities -- have the highest average student family income.  The institutions that are the farthest from his model -- community colleges -- have the lowest average student family income.  At my own cc, for example, the median student debt level is zero, because a student on full Pell doesn’t have to pay tuition or fees out of pocket.  That’s how low our tuition and fees are, and that’s not unusual for the sector.  

Wildavsky notes, correctly, that states differ in the levels of subsidy that they offer to public higher education.  That would seem to open up an opportunity to compare and contrast.  For example, California offers far more per-student support than New Hampshire does.  Is New Hampshire’s economy outstripping California’s?  Are low-income students better served in New Hampshire than in California?  These aren’t hard to test.  

Wildavsky doesn’t take a long historical view, though he certainly could.  Over the past several decades, most states have shifted cost from subsidies to students.  Pell grant spending has increased, student loans have ballooned, and students working thirty or more hours a week for pay outside of class has gone from aberrant to normal.  We’ve gone from very low tuition -- CUNY was free until the mid-1970’s -- to considerably higher tuition and higher aid over the course of decades.  Has that resulted in greater economic growth?  Is the economy growing faster in 2014 than it was in, say, 1968?  (Hint: no.)  Has it resulted in greater economic equality, as all of that high aid should have led us to expect?  (Hint: no.)  

Although you wouldn’t know it from Wildavsky’s piece, many institutions -- including public ones -- offer students less aid than their higher tuition would justify.  It’s called “gapping.”  Small gaps can often be filled by extra private borrowing, extra work hours, and/or extra family help.  Big gaps generally either prevent enrollment or prevent completion.  The fact that “gapping” is an increasingly common practice suggests that Wildavsky’s faith that the savings from reduced subsidies to the wealthy would be redirected to the poor is naive.  That’s not how it works.

It’s a commonplace of policy studies that programs for the poor become poor programs.  They become identified in the public eye with their beneficiaries. That’s why philanthropic support -- also absent in Wildavsky’s analysis -- flows much more freely to already-affluent institutions than to, say, community colleges.  Support flows to perceived success, rather than to perceived need.  Over time, that becomes self-fulfilling. To the extent that we push tuition even higher, I’d expect to see the already striking levels of stratification increase even more.  And Wildavsky’s version of lifeboating -- the “undermatching” theory -- implicitly admits that it’s effectively writing off the vast majority of institutions entirely.  

If we’re serious about educating lower-income students at scale in a sustainable way, the high-tuition high-aid model doesn’t work.  If it did, we’d be enjoying unprecedented economic growth and a rapid expansion of the middle class.  Instead, we need to find ways to make the institutions that most students actually attend just as appealing to people with choices as the pricier places are.  

I know that 1968 isn’t coming back.  The challenge facing higher education leaders now is to interrupt the circuit of self-reinforcing decline through intelligent, sustainable innovations that preserve the best of what has come before.  That’s hard to do.  It’s a lot harder than just raising prices and hoping for the best.  It involves, among other things, paying attention to messy realities like politics, institutions, and history.  But it’s worth it.

Comments:
"Therefore, any subsidy directed to them - such as through pricing below cost - is basically throwing money at people who don’t need it. Liberating those funds from those who don’t need the money will allow states to redirect that money to needier students, who often struggle to complete their studies because of financial issues. "

How do you defend the ongoing tax subsidies for Harvard's $30+ billion endowment? That is much more than they could ever need. How about liberating some of that wealth for needier higher ed institutions? I'm not talking about direct redistribution, just imposing normal investment taxes on their net investment earnings each year, same as the rest of us.

This tax loophole is so large, it isn't even counted as a loophole and quantified each year, as the rest of the tax preferences are.
 
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