Higher Ed Spendapalooza

When word first started leaking out about the upcoming “stimulus package” — not Bush’s little TARP, mind you, but the $825 billion doozy unveiled by congressional Democrats yesterday — it was clear that k-12 education would be in store for some serious cash. Well, that didn’t sit well with the higher education community, which complained — I mean, suggested in the interest of the common good — that giving it billions and billions of federal dollars is also crucial for stimulating the economy. It appears they’ve been heard: the proposed American Recovery and Reinvestment Bill of 2009 would furnish a windfall for all of education, blowing more than $100 billion on everything from university-based research to “teacher technology training.”

Now, don’t worry — I’ll be focusing a lot more on k-12 in the coming weeks. I wanted to attack one notion, however, right off the bat, especially since we held a forum that addressed it just two days ago: that higher education somehow needs increased government support.

Let’s start by confronting the constant and, one can’t help but conclude, deliberately misleading assertion that higher education has been the victim of ruthless public funding cuts that have forced costs onto "the backs of students." As I made clear on Wednesday (watch the streaming video of the forum and/or download my slide show for details) the inflation-adjusted trend for total state and local higher education spending has been hugely upward over the last 25 years, and on a per-pupil basis has remained essentially constant. At the same time, net per-pupil public college revenue coming through tuition has gone consistently up, rising much faster than would have been needed to make up for any “lost” state and local funding. If you isolate four or five-year stretches — as the Delta Cost Project, for instance, has just done — you could say that tuition has increased just to keep revenue stable. If you check out the long-term trend, however, you absolutely cannot conclude that.

Which brings us to the second big public expenditure for the ivory tower: student aid. When college prices go up, the taxpaying public largely absorbs the blow. Between 1982 and 2007, total inflation-adjusted federal and state aid, including grants, loans, work-study expenditures, and education tax benefits, rose from $30.8 billion to $103.9 billion (Table 1). On a per-pupil basis, real grant aid (including, importantly, both institutional and federal and state aid) grew from $1,939 to $4,965, and federal loan aid rose from $1,562 to $4,841 (Table 3). Both amounts grew faster than the price of tuition, fees, room and board at public and private four-year colleges (Table 5).

So let’s be clear: The public has been paying out the nose for higher education. Indeed, all of this public largesse is a major reason — though not the only one — that the United States leads the rest of the industrialized world hands-down on tertiary education spending (Table B1.1a). And, as you’ll see on my slide show from Wednesday’s forum, it’s not like the money has translated into smarter grads. Quite the opposite: It seems largely to have enabled our college students to live higher on the hog while greatly depreciating the meaning of "a college degree.”  

Oh, and there’s one more thing: A common complaint about higher education is that professors care more about research than students. Well, don’t tell that to the stimulators, who want to “put scientists to work” by spending billions more on university-based research. Sure, inflation-adjusted federal expenditures on research at academic institutions rose from $13.9 billion in 1980 to $31.4 billion in 2006, and the unemployment rate for scientists and engineers hit an all-time low of 2.5 percent in 2006 (the latest year with available numbers), but we obviously need a lot more government–funded science projects.

Now, maybe blanketing college campuses with another several feet of taxpayer cash would be worthwhile if doing so really would produce economic growth, but here’s the thing: there is no conclusive evidence suggesting that it would. Indeed, as I noted during Wednesday's forum, when Prof. Richard Vedder attempted to determine the effect of higher education spending on state economic growth, he found a negative impact. Why? Because if they could keep their hard-earned money, taxpayers would spend it more wisely and efficiently than will politicians, students, and academics who get it, essentially, for free.

Maybe think of it this way: Would you trust a wealthy man who keeps crying poverty so that you’ll give him more money and he can get richer? Of course not: He’s a swindler, for crying out loud!  Well guess what? That rich man really exists: He lives in a great big ivory tower, and he’s about to come into a whole lot more of your hard-earned dough.