Retrograde Trends in Higher Education

[Update: Appearing in The Folio Weekly, June 12, 2013]

There is a long-standing debate in sociology on whether education is the “great equalizer” or the “reproducer of inequality”.  As an “equalizer”, education advances the principle of equal opportunity in allowing the less advantaged access to the educational credentials that can translate into upward mobility. As a “reproducer”, education -- both in quantity and quality -- is accessed disproportionately by the privileged, and thus used to retain and secure their grip on wealth and power.

Over the past two decades there is little question that the weight of evidence has moved heavily in favor of the argument that education is a system reproducing inequality rather than equalizing life chances. And as income inequality has steadily increased, the American social class system has become more caste-like due to the intergenerational transmission of privilege or deprivation.  One clear indicator – today, among the twelve major industrialized nations, the United States is ranked tenth in the degree of social mobility.  This is not the kind of “American exceptionalism” we aspire to.   

But a number of recent reports by public policy research institutes indicate the higher education sector has taken the system to a whole new level of institutional class discrimination. It is important to emphasize that there are several broad political economic forces shaping these pernicious trends -- the most significant is the systematic long-term defunding of the public sector under the economic regime of neo-liberalism.

As supply-side economics doctrine, promoted by corporate interests, has resulted in lower taxes on the rich and corporations, always in the name of stimulating investment and growth, state governments find that they are less able to finance public services and institutions, including higher education.  Therefore, tuition rates keep rising to make up the difference.

For example, here in Florida, from 2006-2011 college and university enrollment increased 27.7% (3^rd highest among the states) while spending per student decreased by 26%., the third highest decline among the states.

As the cost of education rises, students who have been socialized to believe that a college degree guarantees economic security and upward mobility, finance their education with private student loans.  Rather than a public good, higher education has become a private commodity, varying widely in cost and quality, which some can afford and others cannot.

Unfortunately, rather than reversing the inequitable effects of the privatization of higher education, colleges and universities pursue policies that often further exacerbate the inequities. One widely reported trend involves the desire of, and competition between, universities to recruit the highest achieving high school seniors with merit-based scholarships. While all universities want logically to recruit the most academically competent, these students are also especially prized for their contribution to enhancing an institution’s ranking in the all-important US New and World Report–type publications.  Many universities have become obsessed with their relative position in the hierarchy, and the need to keep moving up in the rankings.

As one might expect, this status anxiety manifests itself in a shift in the proportion of funding from need-based to merit-based scholarships. Since there is a strong correlation between family wealth and student academic success, these financial aid policies simply reinforce the cumulative advantage of the rich, neglecting any consideration of the family’s ability to pay.  The net result is that the least economically advantaged students and their families pay a higher percent of their income on education than their wealthier counterparts -- a highly regressive and economically unjust result.  

There is another practice, recently reported, that further buttresses class-based inequities. Universities are now seeking to recruit those students who are best able to cover the full cost of tuition. This means giving admissions preference to the “full-pay” students who do not apply for financial aid, can be lured to the school with a small or no scholarship, and are able to cover tuition costs out-of-pocket. Again, this obviously favors upper and upper-middle class students.

                                                                                                   

Finally, a recent study titled “Bridging the Higher Education Divide” highlights the growing class-based institutional segregation between 4-year universities and community colleges. More specifically, it is noted that: “High-socioeconomic status (SES) students outnumber low-SES students by 14 to 1 in the most competitive four-year institutions, yet low-SES students outnumber high-SES students in community colleges by nearly 2 to 1.” They refer to this as a “separate but unequal” educational arrangement.

As if all this were not bad enough, we now discover that university endowments are profiting off the rising debt burden weighing on struggling college graduates -- a level of debt that, remarkably, now exceeds that for credit cards. It has been reported in the Huffington Post that the very entity from which less advantaged students are borrowing large sums of money to cover the cost of rising tuition at their university – Sallie Mae – is also where some universities are investing their endowment funds.  Or, to put it more bluntly, some universities are actually making money on students twice. Once with the cost of tuition paid through loans, and second through the returns on the investments in the corporation that is lending students the money.

On purely economic grounds there is no doubt this is a wise investment decision for universities. After all, Sallie Mae is essentially a monopoly, with students having few alternatives sources for financial assistance.  Accordingly, there have been many complaints about the predatory behavior and poor customer service of Sallie Mae. 

But on ethical grounds, one might ask if universities should be investing in Sallie Mae? Or whether this is a conflict of interest?

While this type of investment practice may be business as usual for the corporate/ financial sector, where “shareholder value” and the maximization of profit trump all other considerations, universities should to adhere to a higher standard.

Unfortunately, for most universities, there is no way to know even where the endowment is being invested. Private investment firms manage the money, and such information is not covered under any sunshine law.

This is another area where universities could play a more progressive role – putting their money where their mouth is. I have raised the issue of endowment transparency at my own university. I believe there should be greater transparency to determine if endowment investments are consonant with the espoused values of the institution.  That is, we might regard some corporations or industries less desirable as investments than others given, for example, their record of criminal violations, labor relations policies, or the particular line of business?

This endowment investment issue is starting to heat up. Currently, there is a national movement by college students demanding that their universities divest from fossil fuel companies that advance and defend an energy strategy contributing to environmentally destructive climate change. A similar movement may arise as it relates to firms like Sallie Mae.

In the end, one might expect institutions of higher education, above all, to be dedicated to principles of equal opportunity and corporate social/environmental responsibility. But increasingly, it seems, there are other economic objectives and priorities that have displaced a commitment to these values. Ultimately, it is up to the students and the faculty to decide what kind of institution they want and whether current developments are departing from that vision.  They then need to take organized political action that starts on the campus and extends beyond to the statehouse and the federal level.

But thus far, for the most part, there has been more apathy than activity; though there are emerging signs that “the times they may be a-changin’”.