California Grubbing
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.
Filed under: Education and Child Policy; Tax and Budget Policy
Degree Disaster Behind The Great Wall
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.
Filed under: Education and Child Policy; Tax and Budget Policy
History Fun Fact: Ayn Rand Liked Ed Tax Credits
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 . . .
We Should All Pay for Cal Athletics!
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.
Filed under: Education and Child Policy; Tax and Budget Policy
Lies Our Professors Tell Us
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!
Early Education: Lots of Noise, Little to Hear
This weekend, the Detroit News ran a letter to the editor taking issue with a piece I wrote about the Student Aid and Fiscal Responsbility Act (SAFRA). Strangley, though the main part of SAFRA deals with higher education loans; the bill contains new spending all over the education map; and I made no specific mention of early-childhood education in my piece (though there is an early-ed component in the bill); the letter is all about pre-K education.
That the pre-K pushers even saw my op-ed as something to write about illustrates how very agressive they are. Unfortunately, the letter also demonstrates how dubious is the message that they are so loudly and energetically proclaiming. Here’s a telling bit:
Economists, business leaders and scientists all know from cold, hard data that high-quality early education provides a significant return on investment in terms of education, social and health outcomes.
Whether pre-K education is worth even a dime all depends on how you define “high quality.” As Adam Schaeffer lays out in his new early-education policy analysis — and Andrew Coulson reiterates in an exchange with economist James Heckman — the “cold, hard data” say only that a few programs seem to work, and most don’t. Pronouncements about the huge returns on pre-K investment are almost always based on very small, hyper-intensive programs that would be all but impossible to replicate on a large scale. And the programs that do function on a large scale? As Adam lays out, they provide little to no return on investment.
The early-education crowd is very good at getting out its message. Too bad the message itself is so darn suspect.
Lots of Higher Ed Stuff
Probably because it’s back-to-school time, there are lots of interesting higher education related items worth checking out today. Here are a few:
- I have a new op-ed on the Student Aid and Fiscal Responsbility Act, the bill that we’re told will save taxpayer money but will almost certainly cost us tens of billions. Meanwhile, the Associated Press published a big article on “spin” about the legislation that ignores supporters’ extremely dubious assertions about SAFRA’s true costs — the AP repeats the supposed savings line without question – but instead focuses on whether Pell Grant increases will be as large as some people hope .
- Over at the Pope Center for Higher Education Policy, they’re running a three-part series that’s really a lengthy email exchange among numerous experts, including myself, on controlling college costs. The central question is whether more government “transparency” requirements hold the key to containing skyrocketing college prices, or whether what we really need is to cut third-party payments. I think I’ve made it clear where I stand, but if you’re not sure (or even for some reason want other opinions) definitely take in the Pope series. Also, mark your calendars for a debate we’ll be having on this subject right here at Cato on October 6!
- William McGurn has an excellent commentary in the Wall Street Journal explaining that — shocker! — you can make a very good living without getting a college degree.
- I haven’t read it yet but have seen a summary, and if the summary is accurate a new paper from the National Bureau of Economic Research shows that colleges and universities contribute no more to their local economies than “other forms of economic activity.” This puts another serious hole in the highly suspect argument that more public money for higher education is good because enriching colleges is better for everyone.
And that’s the ivy-ensconsed news for today!
A Look Inside the Ivory Tower Spiral
With the Obama Administration promising to ramp up all sorts of college-affordability (read: government expenditure) efforts in the coming months, now is a crucial time for Americans to understand why our colleges and universities ingest money as bottomlessly as their students guzzle beer. With that in mind, the release of a new report from the John William Pope Center is perfectly timed. The Revenue-to-Cost Spiral in Higher Education explains how colleges’ internal arrangements render them almost destined to spend every dime they bring in, no matter how wastefully. The basic problem, argues author and economist Robert E. Martin, is that very few colleges and universities are intended to make a profit — which would give “owners” a powerful incentive to maximize efficiency – and no one really seems to be in charge at most schools.
Of course, this is a serious over-simplification of Martin’s argument, so you’ll have to read the report. But don’t just stop there: A few weeks ago the Pope Center held a colloquium right here at Cato to discuss the report, and Pope Senior Writer Jay Schalin just posted an excellent summary of the back-and-forth between participants. I think you’ll find the points about the third-party-payer problem especially powerful, but there are lots of other good arguments highlighted as well.
Old Enough to Die for Your Country, Too Young for a Credit Card
While much of the debate around the so-called “Credit Cardholders’ Bill of Rights” has been on ending various card policies aimed at disguising different credit risks, one group of cardholders is certain to lose their right to credit under this bill: adults between the ages of 18 and 21.
Under the current Senate bill, the only way for someone under the age of 21 to get a credit card would be either:
1) they have a co-signer, such as their parent, sign for it, or
2) they maintain a job with sufficient income to cover any obligations arising from the credit card.
By contrast, neither of these requirements is put in place for student loans; there is the clear expectation that you pay those loans back in the future from your increased future income that results from going to college. While the purpose of a student loan is to offer one the means to get a higher education, the purpose of any form of credit is to borrow against your future earnings in order to enjoy some consumption today. Whether that consumption is in the form of textbooks or beer and pizza should be left up to the individual—we are talking about adults here—and not the state.
As with any legislation, there are likely to be substantial unintended consequences. Of the approximately 18 million students enrolled in U.S. colleges, some number of those will not want to give up their credit cards (maybe they value their beer and pizza) and will accordingly take what may be their only option to maintain that consumption: a job in addition to their studies. As with any choice in lift, this one comes with a trade-off. One of the primary factors related to whether one graduates from college is if one is holding a job while in college—the relationship being that the more hours a student works unrelated to classes, the less likely they are to finish college. Some students are going to take that trade-off. That means one impact of this bill will be that slightly fewer students will finish college. If we are ever to expect college students to start behaving as adults, we should start treating them as such, including allowing them to make their own credit decisions.
Not Everyone Needs to Go to College
William F. Buckley famously said that he’d ”rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University.” That was, of course, a swipe at the practical wisdom of those people who spend their lives teaching in ivory towers, and a deserved one. But score one for the egg heads when it comes to identifying the practical reality of modern higher education.
According to a new report from Public Agenda, while college presidents blather on about their impoverished schools and what a tremendous public good higher education is, the professors (at least those that Public Agenda interviewed) are pretty darn realistic about the real problems in academia. This quote, echoed in professorial statements throughout the report, captures exactly what a lot of us libertarian types have been saying for years:
I think a big problem facing higher education is the idea that everybody should get into college. I don’t think everybody is designed to go to college. Not everybody needs to go to college. I know that’s shooting ourselves in the foot, because that’s where our jobs are. The more people show up at our schools, the more jobs we get. Not everybody needs to go to college. Not everybody should. Not everybody’s prepared.
Public Agenda doesn’t identify who the speakers are in its report, but whoever said the bit above – or any of the similar statements about too many people going to college or being pushed to go to college — actually deserves to get tenure.
Educational Productivity Has Collapsed — NAEP
The latest Long Term Trends results of the National Assessment of Educational Progress are out. They reveal a productivity collapse unparalleled in any other sector of the economy.
At the end of high school, students perform no better today than they did nearly 40 years ago, and yet we spend more than twice as much per pupil in real, inflation-adjusted terms. I can’t think of any other service that has gotten worse during my lifetime. Our school system has failed alone.
While the stagnation in overall achievement masks a 3 to 5 percent gain in the achievement of African American 17-year-olds since 1970, the scores for whites at the end of high school are virtually unchanged.
Anyone who points to the slightly higher scores in the early grades as cause for celebration is missing the point. What parents care about is that their children are well prepared for higher education and future careers at the end of their secondary education. The fact that scores have risen somewhat in the early grades means little since those gains evaporate for the vast majority of students by the time they graduate.
Update: The Associated Press story is now out on the Long Term Trends NAEP results… and it doesn’t mention the long term trends. The story only reports changes in achievement over the most recent 4 year interval of a test whose raison d’être is to reach back to the early 1970s. I wonder why…. Fortunately, the Detroit Free Press does a better job.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets