LEGISLATORS, opinion-makers and the public at large have been rightly skeptical of US automakers’ appeals for a bailout. It may be time to apply the same skepticism to the growing calls for government to send billions of dollars to bail out public higher education – the stimulus du jour.
Behind this latest rush to spend more tax dollars is a spate of recent stories (generated, predictably, by reports from advocacy groups) declaring that college is becoming unaffordable for more and more students as states cut funds to public universities amid the downturn. The reports prompted everything from outrage to compassionate outpourings from columnists, legislators and university administrators, who warned that we’re in danger of killing the American dream for many kids and making our economy uncompetitive unless we “invest” quickly in our higher-education system.
Missing in the media barrage was any evidence that investing substantially in public universities actually pays off economically for a state, or that expanding access to college really results in more people getting degrees (and better jobs), or that state universities use their public subsidies wisely in the first place.
I couldn’t find one journalist who bothered to ask whether any of this was true. A few researchers, however, have asked these questions, and the answers aren’t always pretty.
One skeptic is Richard Vedder, head of the Center for College Affordability and Productivity at Ohio University. The economics professor has spent years observing the upward spiral of tuition at US colleges and universities and the rise in government higher-ed subsidies. His research suggests we’re overinvesting in our public universities.
Vedder has found little evidence that government spending on higher education stimulates an economy. He has done hundreds of analyses trying to understand the relationship between subsidies for public universities and local economic growth, and found that, at best, the spending produces no gains. At worse, “the more states spend on higher education, the lower the growth” over time.
Vedder suspects this is because the “growth-impeding effects of taxes that finance higher-education spending are greater than the growth-enhancing effects of that spending.”
Still, shouldn’t we expand access to college? Doesn’t public funding of universities accomplish that? Not necessarily.
State universities don’t devote much of such new funds to keeping tuition low – only 30 percent on average, in one Center for College Affordability study. Instead, they pour more money into intercollegiate athletics and student services, rapid salary hikes and increased hiring of noninstructional personnel. In 1975, for instance, the ratio of noninstructional staff to instructors at US colleges and universities was about 4.5-to-10. Today, it’s about 8-to-10.
And even devoting the money to lowering tuition doesn’t necessarily pay off – because expanded access may not actually lead to more college graduates.
As Vedder notes, many public universities have a high attrition rate: Well under 50 percent (and, in some cases, under 40 percent) of those who enroll earn a degree. Those stats aren’t really surprising if you examine college-readiness rates. In a 2003 study, education researchers Jay Greene and Greg Forrester judged that only 32 percent of all high-school seniors had the necessary skills and coursework to be college-ready – yet 34 percent of all young adults were enrolled in college.
Vedder concludes that added government funding is encouraging some unqualified students to pursue college and that the attrition rate among those students is very high.
Still, access to college has become part of the narrative of how to make America a more just society. Higher education can close the income gap between the rich and everyone else, so the idea goes, because college grads earn substantially more than those who don’t get degrees.
This confuses correlation (those who graduate from college earn more) with causation (graduating from college means one will earn more). In fact, the reasons why college grads earn more may have little to do with a degree. For one thing, they have higher IQs, on average, than those who don’t have degrees; IQ may be behind the income differential, not a college degree.
There is a message in state universities’ financial woes, but it’s not the one that we’re hearing. Today’s economic and fiscal mess represents a chance to reassess and reform our state-university systems. That means targeting savings by cutting administrative personnel and increasing instructors’ course loads.
It also means taking a hard look at public institutions with low graduation rates. Some probably need to close. And it means focusing assistance on needy students who are academically qualified to attend college while eliminating aid (like low-cost loans) for affluent students. This is the real opportunity.
Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute. From RealClearMarkets.