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Government subsidies and the spiraling cost of higher ed, con’t

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treasure

I have another piece on the relationship between government subsidies for higher ed and tuition rates. When I wrote about this last month in the Times, various people complained that I didn’t emphasize sufficiently the relative decline of state appropriations for higher ed on a per capita student basis (While total state appropriations for higher ed have increased by 48% in real terms since 1980, enrollment in public higher ed has grown by 60% since then).

But, as I mentioned at the time but didn’t explore in any detail, state funding is just part — in fact it’s almost exactly half — of the picture when it comes to government subsidies of higher in America. Many people are aware of the Pell grant program, but what isn’t nearly as well known are the ways in which the federal tax code has been amended in recent years to subsidize higher ed.

According to the congressional Joint Committee on Taxation’s most recent estimates of federal tax expenditures, the IRS is currently redistributing approximately $45.7 billion annually in tax revenue in ways that directly and indirectly support American higher education. (This represents a 675 percent increase in such spending since 1990.) These subsidies can come in the form of tax credits or other types of favorable tax treatment—excluding certain forms of income from taxation or creating special deductions, for example.

The policy dynamics driving these increases are fairly straightforward: Democrats generally like to subsidize public goods such as education, and Republicans typically like tax cuts. (A number of GOP politicians have also started to champion the for-profit college industry.) Tax credits and deductions for higher education enable Congress to simultaneously pursue both of these policy preferences.

The net result of all this is that per student government subsidies for higher ed are at an all-time high in real dollars, and are a good deal higher than they were in the 1980s and 1990s, when tuition at both public and private schools was drastically lower on average.

This graph represents the change in direct and indirect subsidies over time:

ChartGo-2

Here’s how that translates into per student subsidies:

ChartGo-5

Now here are the same totals when limited to direct subsidies (appropriations, grants, and tax credits):

ChartGo-3

ChartGo-4

The disturbing bottom line:

Whether measured in terms of both direct and indirect subsidies, or in terms of direct appropriations, grants, and tax credits, total per-student government support for higher education has increased. Yet this increase has failed to stop or even slow massive tuition increases at both public and private schools.

It’s important to emphasize that this torrent of increased revenue has not been going to people who perform relatively marginal tasks within the modern American university, such as for example teaching and research. Per capita salaries for university faculty are much lower now than they were in the 1970s (This fact is conveniently obscured if you don’t consider the people who do the majority of the teaching at most universities, i.e., contingent faculty, to “really” be part of the institution).

Nor is it going to the people who clean the buildings, cook the food, take care of the grounds, etc. etc. (I’m currently taking part in a union-led movement to try to do something about the disgraceful fact that there are more than 500 full-time employees at the University of Colorado-Boulder who are paid less than $15 an hour — more on this soon).

I appreciate that government subsidies for higher ed constitute a tricky issue for progressives. Certainly, appropriately broad access to reasonably-priced higher educational options needs to be high up on any progressive agenda. But what we have now is something quite different: an invidious synergy between administrative rent-seeking in the guise of expanding educational opportunity, and the political process’s affection for transferring tax revenue to the upper classes (tax credits for tuition payments are a perfect example of the latter).

Reforming America’s higher ed system needs to be based on the understanding that shoveling ever-larger amounts of money into the hands of the contemporary administrative class for them to redistribute as they see fit is at best an incredibly inefficient way to promote genuine educational opportunity. More realistically, the current system promotes the interests of those at the top of the higher educational hierarchy, at the expense of the vastly larger number of people in less privileged positions within these institutions.

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