What should the public invest in and why?
The steering team discussed "who is the customer" of higher education. They noted that we typically think of students as the customer, but businesses and society at large are also customers. Indeed, the "returns" to students' investment in higher education in the United States has been estimated at 15%, and the public returns at 9%, with additional non-monetary returns including better health and more active citizenship. What's the relative size of the investment? Nationally, about 23% is paid by individuals through net tuition, 33% by state/local taxpayers, and 3% by endowments (see attached spreadsheet). In Minnesota, we devoted about $10 per $1,000 of personal income in 2010 to higher ed.
Right now, most state funding goes directly to institutions, which subsidize the cost of education to all students equally, regardless of their academic performance, field of study or financial need. Given the size and importance of the public investment in higher education, do you think that investment should be prioritized or restricted in any ways? How and why?
The most salient observation that I made when looking at the data provided was that the size of the net tuition for public universities is well within what a student might get from federal student aid (that is for many reasons preferable to private funding sources for students) on average. While I don’t agree with this particular idea (that students should have to pay tuition), I do see the Stafford loan program to be a reasonable compromise.
This funding structure is achieving a certain kind of broad access - from what I know of the Staford loan system, all you need is to submit a FASFA form and have a SSN to get the loan money. To rearrange this funding structure with financial need as a primary criteria is something that I would support on principal, but I do not in practice.
In all cases like this you have to draw a line, or write a formula, that is going to give some people the money they need and not help others who may need it but don’t qualify under a static rubric. To create a dynamic rubric and administer it would simply add cost and frustration - as well as potential litigation to an already cumbersome process. These procedural details are ultimately not insurmountable, my primary concern is simply that any reasonable line or formula would show that the vast majority of students need all the help they are being given and more.
According to IRS statistics (http://www.census.gov/hhes/www/cpstables/032010/rdcall/1_001.htm) only 18% of households earned more than $100,000 in 2009. While this is pretty raw data, a reasonable inference is that most college students, no matter the age, are not supported by enough household income to assume a meaningfully large increase in tuition rates without it posing a serious economic burden on them. Further if such a system were to be implemented then it would functionally make public universities almost as expensive as private universities to those students who could afford it - pushing more of these students out of the public system AND implying that the reshuffling of aid would lead to effectively the same result - a broad based subsidy of tuition for all remaining students. As slightly more than a third of households (not individuals) earn less than $25,000 a year there is no way for this population base to afford any college without an extensive loan system (like the Stafford program) or a FAR more radical adjustment of this funding structure than simply rearranging the way that public money is used.
For all the above reasons I don’t see financial need of the student as a compelling reason to move money around on this scale, though I do see a pressing need to inject more money into the system as a whole on a larger scale.
As far as funding based on the field of study or academic performance - I don’t see either area to be appropriate targets for legislation by purse strings. If a field of study simply has no obvious application to 80% of the population, that does not make it a truth, it makes it a perception. So long as the university clearly and honestly communicates the value of a particular degree (something that I see the state regulating though investigation and prosecution under the law, not the pocketbook), it ought to be up to the student to apply for any given degree and the school to asses the applicants. Similarly academic performance is already tied to student funding - and meaningful procedures to alert the student to the consequences of their choices are industry standard.
I’m adverse to piling on an economic hardship to students who might have their academic performance suffer due to a catastrophic illness or injury, loss of a friend or family member etc. These students often improve over time or after taking a period of time off school and adding an extra cost to their education seems like the wrong response. For those students who are simply not preforming well, cutting funding to the school only limits the options for the institution to provide the support that student clearly needs.
While the financial costs of higher education are a real barrier for many students, the failure of K-12 education to properly prepare many of these same students for higher education is perhaps and even more powerful deterrent. Despite the fact that these students must muster a great deal of perseverance to earn low grades on the outset of their educations, many won’t appear to be good students (earning good grades in challenging courses) for many semesters. Transcripts don’t tell the whole story and funding should not be tied to them.
To summarize - I think that there is a desperate need to change the funding structure of higher education, but to tie already inadequate public subsidies to need (which is commonly high), field of study (which is an issue of academic freedom) or academic performance (which many profoundly punitive for the wrong reasons to the wrong people) seems like exactly the wrong way to go.
I think that one final observation bears weight in conclusion, most of the problems that individual students have with the funding structures of higher education happen when they get out of school - not when they are in school (most, not all). These problems exist for graduates form law programs to arts programs, these problems exist for students who graduated at the top and bottom of their classes, these problems exist for students who come from households in the bottom 10% all the way to the second quinitle of income distribution. This suggests a systemic problem that can’t be addressed by minor changes to the implementation of a part of a part of the system.