It’s Time We Got Serious About Solving the Higher Education Problem

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Does the Brookings Institution have a problem with the issue of higher education reform?

A colleague asked me that after reading the email that we both received from the Center on Children and Families at Brookings with the subject line, “Sanders’ Free College Proposal Would Help the Rich More Than the Poor, New Brookings Research Finds.”

According to its latest Evidence Speaks Series report, Brookings contributor and Urban Institute Senior Fellow Matthew M. Chingos contends that Senator Bernie Sanders’s  disproportionately benefit students from higher-income households and leave those at the opposite end of the economic spectrum with non-tuition-related expenses of potentially greater value.

Chingos’ argument hinges, in part, on the notion that students from higher-income households “tend to attend more expensive institutions.” What’s unclear is whether he means that students from affluent families typically attend more expensive in-state public colleges and universities, or out-of-state institutions, which typically charge higher prices to nonresidents. Given that disparity, one would think that the intent of the Sanders proposal is to promote in-state attendance, although that too is unclear.

Chingos also acknowledges that his study “does not consider the distributional implications of the revenue side of the free college proposals, such as Sanders’s proposed tax increase targeted at affluent families.” In other words, his analysis does not to take into account the offsetting financial impact of the higher taxes these same households would end up paying to fund the Sanders plan, which suggests a premeditated conclusion — and the reason for my colleague’s uncertainty.

The concept of free tuition for higher education isn’t novel. Germany, for example, put it into place on a national level a couple of years ago. But unlike the free-wheeling system in the U.S., admission standards at German schools are more rigorous, and students must cover their personal expenses. Many make that work by attending schools that are close to home and taking part-time jobs to pay the bills.

If we decide to prioritize tertiary education by funding it through the federal budgetary process — as many countries now do — wouldn’t it make sense to first determine a fair market price (FMP) for the two- and four-year degrees that our system churns out?

For example, according to the College Board’s Annual Survey of Colleges, average in-state tuition and fees for the 2014 to 2015 school year totaled $9,139. (Out-of-state residents paid $22,958, if that is what Chingos means by “more expensive institutions.”) As for the in- versus out-of-state mix, nonresidents account for as much as 30% at certain high-profile schools.

Perhaps this can serve as a reasonable proxy for a FMP.

If so, then given that the federal government spends upwards of $160 billion a year on its various higher education-related programs on behalf of the 20 million who currently attend college, nearly sufficient funding already exists to cover everyone’s higher education costs.

Consider the impact on the higher education marketplace if that were to come to pass. Schools with high operating costs would have no choice but to do what they should already be doing:

  • Seeking out other schools with which to combine for the sake of reducing aggregate administrative costs.
  • Exiting non-education-related businesses that distract from the core mission of efficiently and effectively delivering high-quality higher education.
  • Bolstering the capital account that will be needed to pay for all that by divesting the infrastructural trappings that are associated with those activities (such as dormitories, cafes and fitness centers).

Pretty soon, the price of tuition will decline to the point that it coincides with the newly capitated governmental payment plan, and lawmakers will no longer be able to avoid addressing a problem that the Brookings Institution dismisses as “often-hysterical”: the student loan debt crisis.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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