Tag: higher education

Our Little Scholars

By
Neal McCluskey

As I mentioned a few days ago, today is the “Day of Action” in California – and, it turns out, elsewhere – when college students and just general protectors of public schooling are supposed to take to the streets and demand that taxpayers fork over not one less red cent to students and schools.

Ironically, the mindless, property-destroying, absurd goings-on that have surrounded past such demonstrations in Cali – and are already in evidence today – brilliantly illustrate one major reason we need to cut higher education subsidies, not increase them. Clearly, too many college students have both far too much time on their hands, and far too little self control, to justify spending hard-earned taxpayer dough on their “education.”

But at least the ostensible motivation behind recreational rioting in California has been slightly related to a principle – namely, the principle that taxpayers owe students stuff. That’s actually a better excuse for taking to the streets than what set off last night’s student riots in College Park, Maryland: a victory in a basketball game. (To be fair, University of Maryland students also riot after losses – they’re no fair weather fans!)

And to think – one of the reasons we’re supposed to support massive subsidies for students is that it serves the common good. Go figure.

Topics: 
Education and Child Policy, Tax and Budget Policy

Obama Ringing the Pell

By
Neal McCluskey

As part of his ill-considered credentialing-to-compete initiative, President Obama wants to greatly increase both the size and availablity of Pell Grants. Under his proposed FY 2011 budget, the total pot of Pell aid would rise from $28.2 billion in 2009 to $34.8 billion in 2011; the maximum award would go from $5,350 to $5,710; and the number of students served would rise by around 1 million.  

A critical question, of course, is whether increasing Pell will ultimately make college more affordable or self-defeatingly fuel further tuition inflation. The New York Times took that up in yesterday’s Room for Debate blog.

Economist Richard Vedder has long educated people about the inflationary effect of student aid, and does so again with great clarity. It’s higher-ed analyst Art Hauptman, however, whom I think best captures what likely occurs when Pell is combined with all the cheap loans and other aid furnished by Washington, states, and schools themselves:

The degree to which student aid affects what colleges and universities charge varies between the Pell Grant and student loans. The Pell Grant has not had much effect on tuition levels in part because the amount of the awards does not vary with where a student enrolls. Institutions cannot affect how much a student receives, and the institutions that charge the most enroll the fewest Pell Grant recipients.

By contrast…there are several good reasons to believe that student loans have been a factor in the rising cost of a college education. Tuition has increased by twice the inflation rate for the past three decades while annual loan volume has increased tenfold in constant dollars.

Unlike Pell Grants…colleges have some control over how much students borrow as loan amounts. Moreover, just as one couldn’t imagine house prices being as high as they now are if mortgage financing were not available, it is difficult to believe that colleges and universities could have increased their charges so rapidly over time without the ready availability of students’ ability to borrow.

[W]e should worry…that increases in Pell Grants may lead institutions to reduce the amount of discounts they would otherwise have provided to the recipients, who are from poor families, and move the aid these students would have received to others. This possibility…is supported by the data showing that public and private institutions are now more likely to provide more aid to more middle-income students than low-income students.

So what’s likely going on? Cheap federal loans – which are available to students of all income levels and vary according to a college’s price – are probably the main direct tuition inflator. More indirectly, Pell probably encourages schools to move other aid from poorer to wealthier students, enabling the latter to pay ever-higher “sticker” prices. In other words, student aid powers tuition inflation!

Which brings me to a quick comment about the submission from College Board economist Sandy Baum, who trots out the standard “declining state appropriations”  to explain our college-price pain.

How many more times do I need to disprove this? Apparently, at least once more:

(Source: State Higher Education Executive Officers)

Public funding is a roller coaster and tuition revenue an incline. Over the last quarter century, per-pupil state and local funding for public colleges and universities went up and down, but dropped overall by a mere $8 per year. In contrast, public colleges’ per-pupil revenue from tuition (net of state and local student aid) rose more or less unabated, growing by about $73 per year. 

This – as well as the fact that private colleges are also guilty of huge price inflation – clearly belies the notion that colleges raise prices because skinflinty governments make them. That might be part of the explanation, but an even bigger part is almost certainly that colleges raise prices because, thanks to ever-growing student aid, they can.

Topics: 
Education and Child Policy, Finance, Banking & Monetary Policy

California Grubbing

By
Neal McCluskey

Kids often have a tremendous sense of entitlement. Well, there are a lot of kids in California colleges — and running them.

You probably have heard about the University of California Regents voting yesterday for a 32-percent tuition hike over the next two years. Not surprisingly, many students are angry, some enough that they were arrested protesting outside the Regents’ meeting.

Now, a 32 percent hike over two years isn’t small. But here’s the thing: California has typically charged students very little relative to both state taxpayer funding and national averages. As you can see in the chart below, which uses data from the State Higher Education Executive Officers, net per-pupil tuition revenue (meaning revenue from tuition minus any state financial aid) in California has hovered around $1,200 over the last 25 years, and has only gone up about $18 per year. Meanwhile, state taxpayers have been shelling out around $7,300 per pupil per year. So state taxpayers have been furnishing the vast majority of funding for California college students, and students have done very little to make up the vast gulf between what they pay and what taxpayers shell out.

How does California compare to the rest of the nation? On average for all states, net per-pupil revenue from students has risen from just about $2,000 to $4,000, putting the ever-growing average around $3,000, or close to three times what Golden State students have been furnishing. Funding from state and local taxpayers, meanwhile, has been just slightly lower nationally than in California.

So California students have been getting a heck of a deal, which is no doubt one among many reasons the state is on fiscal life support. Sooner or later bills come due, and that has left the state little choice but to make students pay more for the education of which they are by far the biggest beneficiaries.

Naturally — but still shamelessly — students are acting like victims now that the decrepit gravy train is slowing down a bit.  Unfortunately, the adults in charge of California colleges are also naturally — but perhaps even more shamelessly — stoking student anger so that they don’t have to do things that make their jobs less pleasant.

Despite the utterly unsustainable taxpayer funding for higher education that California has doled out for decades, for instance, UC president Mark Yudof had no qualms about declaring that:

We’re being forced to impose a user tax on our students and their families. This is a tax necessary because our political leaders have failed to adequately fund public higher education.

Last I checked, what a customer pays for a service is called a “price” not a “tax.” A tax is what has been used to make taxpayers bear by far the biggest part of California’s higher education burden while students have furnished but a token amount. And please don’t give us the “failed to adequately fund” line. UC Berkeley Chancellor Robert Birgeneau has been happily trotting out that disproven dreck in a grab for federal taxpayer dollars at the same time it has been discovered that he’s been pushing millions of dollars intended for academics and other purposes to Berkeley athletics.

It’s hard enough to accept the underfunding bit when the data clearly show it not to be the case. It’s even harder when college leaders spend their precious dollars on water polo and golf.

It’s time in California for the adults to stop acting like kids, and for the kids to start paying their share. But don’t get your hopes up, at least in higher education. It seems that no one there is without a shameless sense of entitlement.

Topics: 
Education and Child Policy, Tax and Budget Policy

Degree Disaster Behind The Great Wall

By
Neal McCluskey

Based on my regular reading on education, but not China specifically, I know that the world’s most populous nation has had a lot of trouble finding jobs for its throngs of recent college graduates. I wrote a bit about that yesterday, pointing out that the important higher education lesson from China is that pumping out more college grads is meaningless if they don’t have skills that are in demand. Well, thanks to a very helpful Cato@Liberty reader who actually lives in China (and wishes to remain anonymous) I now have a much better idea just how important that lesson is. He directed me to this Asia Times article that includes, among many fascinating tidbits, this startling revelation:

An explosive report released by the Chinese Academy of Social Sciences (CASS) in September said earnings of graduates were now at par and even lower than those of migrant laborers [italics added].

Wow! If this report is accurate, until now I have had no idea how truly ridiculous Washington’s obsession with pumping out more degrees to keep up with the Chinese has been – and I’ve been pretty sure it’s ridiculous! Much more troubling, if I’ve had little clue about the true extent of the absurdity, imagine how far from grasping it our government-loving federal politicians have been! Of course, as I wrote yesterday, even if they did know it, they probably wouldn’t let on.

Topics: 
Education and Child Policy, Tax and Budget Policy

History Fun Fact: Ayn Rand Liked Ed Tax Credits

By
Adam B. Schaeffer

Many thanks to Lisa Snell at Reason for bringing this interesting historical fun fact from 1973 to light: Ayn Rand was a fan of education tax credits:

In the face of such evidence, one would expect the government’s performance in the field of education to be questioned, at the least, [but] the growing failures of the educational establishment are followed by the appropriation of larger and larger sums. There is, however, a practical alternative: tax credits for education.

The essentials of the idea (in my version) are as follows: an individual citizen would be given tax credits for the money he spends on education, whether his own education, his children’s, or any person’s he wants to put through a bona fide school of his own choice (including primary, secondary, and higher education).

Rand’s support for credits is interesting for a number of reasons, not least the fact that she explicitly endorses credits, not vouchers. I’ve had numerous and largely fruitless arguments over which policy is most “free-market” or least distorting. To me it is obvious that credits are the most “free-market” education reform. Now I can skip the arguments and yell, “Ayn Rand!”

Rand’s essay also highlights the fact that education tax credits were, throughout the 1970s and 1980s, the most prominent private school policy on the scene. Federal tax credits were a live issue under Nixon and Carter. Ronald Reagan and the Republican Party gave strong and explicit support for education tax credits throughout the 1980’s – with tax credits, but not vouchers, mentioned specifically in the Republican Party platforms of 1980, 1984, and 1988.

The largely forgotten history of education tax credits … interesting …

Topics: 
Education and Child Policy

We Should All Pay for Cal Athletics!

By
Neal McCluskey

You might recall that a  few weeks ago University of California at Berkeley Chancellor Robert Birgeneau co-authored a Washington Post op-ed calling on the federal government to provide direct support – meaning taxpayer dollars – to select public universities. Birgeneau decried decades of “material and progressive disinvestment by states in higher education,” despite, as I pointed out, no such disinvestment actually occurring.

Well now we know where much of the precious investment in Cal was going – to subsidize sports. According to Inside Higher Ed, over just the past few years Berkeley has provided tens-of-millions of dollars in subsidies and loan forgiveness to its sports programs, which are supposed to be self-supporting.

Now, the whole college athletics undertaking is one that deserves lots of scrutiny for its subsidies and excesses. Cal is certainly not alone in this. But for Birgeneau to take to the pages of the Washington Post, cry poverty, and call for the nation’s taxpayers to foot his school’s bills while he quietly pushes millions of dollars to water polo, rugby, golf, and sundry other sports? That takes a lot of gall. Of course, rent-seeking gall is not in short supply when it comes to higher education.

Thankfully, at least this time it looks like the arrogant aggressiveness is going to backfire. Birgeneau is scrambling, and seems doomed to be thrown for a loss.

Topics: 
Education and Child Policy, Tax and Budget Policy

Lies Our Professors Tell Us

By
Neal McCluskey

On Sunday, the Washington Post ran an op-ed by the chancellor and vice chancellor of the University of California, Berkeley, in which the writers proposed that the federal government start pumping money into a select few public universities. Why? On the constantly repeated but never substantiated assertion that state and local governments have been cutting those schools off.

As I point out in the following, unpublished letter to the editor, that is what we in the business call “a lie:”

It’s unfortunate that officials of a taxpayer-funded university felt the need to deceive in order to get more taxpayer dough, but that’s what UC Berkeley’s Robert Birgeneau and Frank Yeary did. Writing about the supposedly dire financial straits of public higher education (“Rescuing Our Public Universities,” September 27), Birgeneau and Yeary lamented decades of “material and progressive disinvestment by states in higher education.” But there’s been no such disinvestment, at least over the last quarter-century. According to inflation-adjusted data from the State Higher Education Executive Officers, in 1983 state and local expenditures per public-college pupil totaled $6,478. In 2008 they hit $7,059. At the same time, public-college enrollment ballooned from under 8 million students to over 10 million. That translates into anything but a “disinvestment” in the public ivory tower, no matter what its penthouse residents may say.

Since letters to the editor typically have to be pretty short I left out readily available data for California, data which would, of course, be most relevant to the destitute scholars of Berkeley. Since I have more space here, let’s take a look: In 1983, again using inflation-adjusted SHEEO numbers, state and local governments in the Golden State provided $5,963 per full-time-equivalent student. In 2008, they furnished $7,177, a 20 percent increase. And this while enrollment grew from about 1.2 million students to 1.7 million! Of course, spending didn’t go up in a straight line – it went up and down with the business cycle – but in no way was there anything you could call appreciable ”disinvestment.” 

Unfortunately, higher education is awash in lies like these. Therefore, our debunking will not stop here! On Tuesday, October 6, at a Cato Institute/Pope Center for Higher Education Policy debate, we’ll deal with another of the ivory tower’s great truth-defying proclamations: that colleges and universities raise their prices at astronomical rates not because abundant, largely taxpayer-funded student aid makes doing so easy, but because they have to!

It’s a doozy of a declaration that should set off a doozy of a debate! To register to attend what should be a terrific event, or just to watch online, follow this link.

I hope to see you there, and remember: Don’t believe everything your professors tell you, especially when it impacts their wallets!

Topics: 
Education and Child Policy

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