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Stop starving public universities and shrinking the middle class

Robert Reich, professor of public policy | March 1, 2012

Last week Rick Santorum called the President “a snob” for wanting everyone to get a college education (in fact, Obama never actually called for universal college education but only for a year or more of training after high school).

Santorum needn’t worry. America is already making it harder for young people of modest means to attend college. Public higher education is being starved, and the middle class will shrink even more as a result.

Over just the last year 41 states have cut spending for public higher education. That’s on top of deep cuts in 2009 and 2010. Some public universities, such as the University of New Hampshire, have lost over 40 percent of their state funding; the University of Washington, 26 percent; Florida’s public university system, 25 percent.

Rising tuition and fees are making up the shortfall. This year, the average hike is 8.3 percent. New York’s state university system is increasing tuition 14 percent; Arizona, 17 percent; Washington state, 16 percent. Students in California’s public universities and colleges are facing an average increase of 21 percent, the highest in the nation.

The children of middle and lower-income families are hardest hit. Remember: The median wage has been dropping since 2000, adjusted for inflation.

Pell Grants for students from poor families are falling further behind; they now cover only about a third of tuition and fees. (In the 1980s, they covered about half; in the 1970s, more than 70 percent.)

Student debt is skyrocketing – the New York Federal Reserve Bank estimates it at $550 billion. Punitive laws enforce repayment, and it’s almost impossible to shed student loans in bankruptcy. There is no statue of limitations for non-repayment.

And yet, Santorum’s rant notwithstanding, good-paying jobs in America are coming to require a college degree. Globalization and rapid technological change are putting a premium on the ability to identify and solve new problems. A college degree is also a signal to prospective employers that a young person has what it takes to succeed.

That’s why the median annual pay of people with a bachelor’s degree was 70 percent higher than those with a high school diploma in 2009 (the latest Census data available).

But public higher education isn’t just a private investment. It’s a public good. Our young people — their capacities to think, understand, investigate, and innovate — are America’s future.

We used to understand this. During the great expansion of public higher education from the 1950s to the 1970s, tuition at public universities averaged about 4 percent of median family income (compared to around 20 percent at private universities).

Young Americans received college degrees in record numbers – creating a cohort of scientists, engineers, managers, and professionals that propelled the economy forward and dramatically expanded the middle class.

But starting in the 1980s, as in so many other areas of American life, we took a U-turn. Tuition at public universities began climbing. By 2005, it was more than 10 percent of median annual family income. Now it’s approaching 25 percent – still a good deal relative to private universities (where it’s nearly 70 percent), but high enough to discourage many qualified young people from attending.

Public higher education has been the gateway to the middle class but that gate is shutting – just when income and wealth are more concentrated at the top than they’ve been since the 1920s, and when America needs the brainpower of its young people more than ever.

This is nuts.

What’s the answer? Partly to make public universities more efficient. Every bureaucracy I’ve ever been associated with (and I’ve been in some very big ones) has some fat to be trimmed. Yet universities are necessarily labor-intensive enterprises; research and teaching can’t be outsourced abroad or turned over to computerized machine tools.

Another part of the answer is to raise tuition and fees for students from higher-income families and use the extra money to subsidize medium and lower-income kids. Even now relatively few pay the official sticker price; many receive some discount proportional to family income. But this won’t solve the underlying problem, ether.

A big part of the answer has to be more government support for public education at all levels. This requires more tax revenues – especially from Americans who are best able to pay.

Most Americans still believe in the ideal of equal opportunity. And most harbor the patriotic notion that we have responsibilities to one another as members of the same society.

The two principles lead to an obvious conclusion: America’s richest citizens have a duty to pay more taxes so kids from middle and lower-income families have chance to make it in America.

A pending initiative in California would raise taxes on millionaires and use the proceeds to fund public education at all levels. It’s a good idea, and it comes at the right time. Other states should follow.

Cross-posted from Robert Reich’s blog.

Comments to “Stop starving public universities and shrinking the middle class

  1. Great blog post Mr. Reich! I got my undergrad at the wonderful University of Illinois in Champaign. During my last year, the administration was cutting staff positions, forcing faculty to take unpaid leave (during the academic semester, mind you), and asking several university employees to retire early in exchange for a one-time lump sum amount rather than a true retirement package. Simultaneously, the university had just hired a new president, Mike Hogan, and had given him a substantial raise compared to the previous president. I agree that the right-wing animosity towards higher education is absolutely disgusting. In a time when college degrees determine your employment more than ever before we should not be cutting funding while telling people that they just need to make themselves more competitive in the market. However, we can’t convince people to put more money towards public education when there are such blatant examples of inflated compensation for the few at the top.

    This was a great blog post but I think maybe you downplayed the necessity for universities to reform their compensation system to the top administrators. It is not that much different from how a corporation overcompensates their executives while simultaneously asking for more tax cuts to increase profits and compensate the peons.

  2. Today’s news (March 13, 2012) about the RES director who improperly promoted a subordinate simply underlines the problem facing the public university. This incident, and other news stories about huge bonuses given to Chancellors etc, undo everything Prof. Reich and others may argue about the continuing need to fund public universities. It only takes one shrieking headline story to cause literally millions of Californians to say “no taxes for U.C.! Fire them all! Parasites!” etc.

    When, oh when, will true reform of the University, *starting at the top with the Regents*, take place? When will the powerful stop excusing themselves and each other from the standards that reasonable taxpayers would hold them to? When will the Administration wake up to the fact that they are literally destroying the University with their indifference to the appearance of their actions, and their neglect?

  3. Robert, you forgot to mention the root cause of the UC tuition disaster:

    UC Regents, such as Blum who champions his own conflict of interest by gaining competitive advantages for the For-Profit education companies he owns because he and his fellow regents have enabled out of control UC costs for far too many decades, and

    UC Administrators who have perpetuated out of control UC costs during far too many decades of gross mismanagement amplified by the extravagant costs of their Ivory Tower culture.

    But then all of our institutions are in failure mode in spite of all the warnings in the Bible and all of history that teaches us that greed is one of the deadliest of sins that has destroyed all civilizations before ours.

  4. How about taxing corporations? Their profits are derived from college-educated professionals many of whom were educated at public institutions of higher education. If corporations are people, how about we tax millionaire corporations at a higher rate?

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