College for All: Creating a New Deal in Higher Education

May 15, 2017

“Higher education” is a vague term. It describes a sector that is hardly uniform, with over 4,000 degree-granting institutions eligible for federal funding but serious disparities among them. A college education from one of these institutions continues to serve as a prerequisite to moving up the income ladder in our narrative about economic mobility. Yet, this narrative assumes that a degree from the University of Phoenix delivers the same returns as one from Harvard University or your local community college, despite the fact that each offers radically different opportunities for mobility.

The large disparities in outcomes across the institutions that make up “higher education” as a field demonstrate that the industry suffers from monopoly pressures. Consider, for example, that just 25 institutions hold about half of the total endowment assets in the industry. Or that:

Investments from community colleges’ endowments, combined, earn $27.6 million a year, according to the American Association of Community Colleges. That’s how much Harvard alone makes from its $32.7 billion endowment about every two and a half days.

Further, the overwhelming majority of low-income students do not attend the few well-endowed private sector institutions that almost guarantee a path to the middle class. In fact, a new study finds that ‘less than one-half of 1 percent of children from the bottom fifth of American families attend an elite college’. Moreover, the share of students from the bottom 40% at elite universities has remained relatively stable over the last decade. Low-income students overwhelmingly attend public schools, despite narratives that admission is based purely on merit.

Meanwhile, vast declines in state and national appropriations have imperiled the public university system. State appropriations accounted for just 24% of median public university revenue in 2016. That’s a historically low level—between 1989 and 2014, state and local governments decreased spending per student by 25 percent on average (adjusted for inflation). In response to declining funding, public schools meet funding shortfalls directly out of the pockets of their students. Average net tuition and fees for full-time in-state undergraduate students at public four-year institutions soared by 54.6% from 1996-2016.

The concentration of private monopoly power in the industry ensures that few private practitioners hold the keys to the to the American dream of middle class status—and they dole out that access to a select few, usually those with racial and class privilege. This prevents higher education from truly being a “public good.” A public good, like access to water, heat, or electricity, is one that is meant to be “non-excludable,” or universally accessible, and “non-rivalrous,” where use by one party does not limit access to the good by another. It’s time that we stopped building a system where access to the public good of quality college education is limited to only the top private schools.

How then do we fight the large inequities built into today’s higher educational system? We ought to heed the lessons from progressive reformers a century ago. One of the key approaches they used to counter the issue of overwhelming private power for public goods was to strengthen the public option. As Roosevelt’s Sabeel Rahman emphasizes, ‘a high quality public option would provide more equitable and accessible alternatives that compete with private companies and induce higher standards for nondiscrimination, fair prices, and openness.’ A focus on drastically improving the infrastructure and support for public and community colleges, and their students, ought to be our prime response to this crisis of monopoly power.

That’s why we at the Roosevelt Institute are excited to see the rapidly growing interest in proposals for free public higher education through the College for All Act sponsored by Senator Bernie Sanders and Representative Pramila Jayapal in the Senate and House respectively. This legislation would eliminate tuition and fees at public four year colleges and universities for families making up to $125,000, and would make community college tuition and fees entirely free for all. Increasing accessibility to a high quality, accessible public education, as the Act proposes, would ensure that public university students are less mired in debt and more likely to graduate as a result. A 2015 Federal Reserve board survey finds that student debt was the cause of 24% of college dropouts. Just as importantly, creating a real public option for higher education could reduce the discrimination and barriers to entry plaguing the private education sector. It could even trigger the demise of the predatory for-profit educational industry, which profits from the fact that college degrees are necessary in our economy but largely inaccessible to most. The for-profit industry has been exposed for its exploitation of students of color in particular.

Sanders’ bill does not just offer tuition support, it creates structural changes within the increasingly corporatized higher education industry. The bill sets up a host of federal funding requirements for public universities, including maintaining spending on academic instruction and need-based aid; reducing reliance on adjunct faculty; and preventing the use of funding toward administrator salaries, merit based aid, and construction of non-academic buildings like stadiums. Here, it appears, the bill attempts to counter some of the most destructive trends in higher education, including the severe tilt toward insecure, poorly compensated labor through adjuncts, the ballooning of administrator salaries, and the shift in funding priorities toward non-instruction related activities. For instance, more than half of all interest spending on paying down debt at public institutions in 2012 fell into two Department of Education categories: ‘student services’ and ‘auxiliary services,’ which are those that include stadiums, cafeterias, and recreation centers. These trends are part of the reason college has become so unaffordable for the vast majority of the student population, and it is commendable that the bill addresses them.

The College for All Act provides a vital framework for curbing the vast inequality across public and private sectors in our higher educational system. Moving forward, key avenues for future reform must focus on ensuring equity in refinancing across student loan borrowers, building a wider conception of student costs beyond tuition and fees (cost of college textbooks, for instance, have increased by 73% in the past ten years) into progressive reform models, and focusing on desegregating the higher education sector through an explicit racial equity lens. Yet, by reminding us of higher education’s value as a public good freely accessible and available to all, the College for All Act is a huge step in pushing us along this path.