Thursday, July 08, 2010

Picking Up the Slack...The Case for College Vouchers

by Daniel L. Bennett

Inside Higher Ed ran an article yesterday that was a Q&A with Gary Berg, author of a new book - Low Income Students and the Perpetuation of Inequality: Higher Education in America. I haven't read it yet, but a few things that Berg stated jumped at out at me.
Independent institutions comparatively serve students from low-income families to a surprisingly large degree. This trend came about by a combination of forces on the public universities, including limited funding and altered admissions practices at both the prestigious public universities and at second- and third-tier privates. Contrary to common perception, private universities, except for the most selective colleges, have a larger percentage of lower-income applicants than public institutions. This fact is an indicator of how independent universities in some ways are filling gaps in providing access to lower-income students that the public universities fail to meet.

I cannot help but wonder if independents and for-profits serving a larger percentage of students from low-income families aren't a result of our public institutional limitations and failures.

Many of the for-profits pay special attention to providing clear pathways for first-generation college students both in terms of psychological self-esteem issues and the practical aspects of attending college while working and raising families.
According to Berg, the public higher education sector is by and large failing in its mission to provide access and support for the most economically disadvantaged in society. This is not a big surprise to me that governments' attempt to provide a public good, that is to financially support with taxpayer money the production of goods and services that would otherwise be under-produced, has largely failed. State governments provide direct subsidization to their public universities in order to reduce the out-of-pocket costs.Yet, it seems that these subsidies largely benefit the middle and upper classes, groups of individuals who likely would have gone to college without the extra subsidization. Meanwhile, the low-income students, those with the greatest financial need who are unlikely not to attend college without assistance, tend not to benefit from the subsidies because they are not well-served by the public system. The private sector, both non-profit and for-profit, has stepped in to pick up the slack.

That the private sector has figured out a better way to effectively serve low-income students, even while at a competitive disadvantage because they don't receive direct government subsidies, should not come as a big surprise. That government policy continues to dole out large sums of cash to support such a system should be an outrage. Berg suggests that the public sector should try to learn how to serve low-income students from the successes in the private sectors. Rather than preserve the status quo, a better policy would be to make the public colleges compete with the private sector by subsidizing higher ed through the use of student vouchers (call them scholarships if this term is sexier or more politically acceptable), rather than institutional appropriations. That way, if students don't like what State U has to offer or how they are treated, then they can take their money somewhere that is better suited to their particular needs.

This would be a superior policy in several ways. First, it would give students a choice in where to spend the money that they are provided for college. Given the diversity of student needs as well as the diversity of institions of higher ed, it simply makes sense to have policy that encourages students and colleges to be paired up in a manner that is mutually beneficially (the current institutional subsidization policy is one sided in that it benefits the public colleges by providing them with money for enrolling students that may otherwise be better suited elsewhere, but are restricted in their choice due to financial limitations).After all, we don't restrict low-income food stamp recipients to shopping at Aldi or Walmart, but give them a choice of where to spend the money.

Second, given choice in where to spend the subsidy, resources will be allocated in a much more efficient and fair manner. All institituions will have to compete equally for students and the scholarship dollars that follw them. This will limit the distortions in the market and drive efficiency. Currently, the college education market is heavily skewed in favor of public institutions, which as Berg suggested, are failing to serve the most economically disadvantaged.

Third, with a voucher system, public policy could more effectively target the low-income population by making amounts variable, or even restricted, according to need. In this regard, we would be making sure that scarce public resources are being used in a more effective manner to support those that otherwise would not be served.

1 comment:

Craigie said...

The private sector has not figured out a better way to effectively serve low-income students, and the private sector is not at a competitive disadvantage because the postsecondary private sector, in contrast to the elementary/secondary education private sector, receives more total government subsidies than the so-called postsecondary public sector.

There are already "college vouchers." They are called Federal student loans, Federal Pell Grants, Federal Work Study, FSEOGs, Federal ACG/SMART Grants, and so on. Many "private" institutions have set up their business model so that 90% of their revenue comes from the Feds. If you think this will not mean they eventually become regulated as Federal institutions, you haven't been paying attention, but it sounds as if you believe they would perform quite favorably if required to adhere to mandatory Federal performance standards as a condition for continuing to receive the Federal funding.

What the post overlooks is that total government subsidies = federal + state + local government subsidies. State institutions, which seem to be the target of choice of 2000s conservatives, were the target of choice of 1960s liberals. State institutions are the essence of federalism. Unless you believe we should be like other countries, where the national education ministry physically runs all postsecondary educational institutions everywhere, then the American model of state management/mismanagement should be applauded, not criticized, because it is closest to the local needs and desires.

Liberal criticism of state institutions has been obvious, for example, southern state institutions have historically favored admission of upper-class and (sometimes) middle-class white applicants. At least until the Bush era, state institutions kept the cost passed to the student artificially low. The much vaunted "California model" is another example. Jerry Brown has been the first to admit that he paid as a student nearly $0 per credit, and he could have afforded to pay a lot more.

This of course meant that poor and minority state taxpayers were subsidizing the almost free college price to the wealthy students and their families enjoying the fraternity life for four or five years.

While state support of postsec education was regressive, so is almost anything else in life where the state charges the same price to all social and ethnic classes -- annual automobile licensing and registration, for example.

Unless someone (the Feds?) is going to hang out in each state capitol to micromanage things, our American system is based on the idea that states know what their citizens want much better than the Feds do.

This old dispute over postsecondary educational federalism has become increasingly irrelevant as the size and scope of the Federal student aid programs (and other Federal support provided via the Higher Ed Act) have begun to dwarf their impact. While the for-profit colleges' share of Federal student aid has skyrocketed, the private nonprofit colleges' share has actually declined, as state community colleges have been rocked by a series of state financial disruptions over the past decade that has made their students substantial beneficiaries of Federal student aid for the first time. At the same time, several public universities have shifted to a high-price, high-aid model, making them more like private institutions, using the Federal aid as vouchers.