It’s unclear if higher education needs more public funding

Click here to read this article by me that appeared in the San Antonio Express-News.

"Re: “College cost a shared responsibility,” Another View, Nov. 27:

University of Texas professor Richard Reddick calls for increased government investment in higher education since it benefits the community. Yet “states are paying 16 percent less than they did a decade ago” per student. So, one of his conclusions is “our public higher education system needs greater public investment.”

On funding, the federal government also supports higher education, and that share has been growing.
Writing in Forbes in 2016, Chuck DeVore of the Texas Public Policy Foundation said that “since 2000 … direct federal spending on higher education grew by 92 percent while state spending declined by 9 percent.” Federal tax credits also have been adjusted for inflation, “$260 per student in 1998 jumping to almost $900 in 1999 then steeply rising again to hit a little more than $1,500 per student by 2013.”

The Pew Charitable Trusts issued a report in October called “Two Decades of Change in Federal and State Higher Education Funding” that shows the value of federal tax credits for higher education, adjusted for inflation, rose from $13.5 billion in 2000 to $40.5 billion in 2017. Also, from 2007-17, there was an additional increase for veterans of about $7 billion.

It is not clear if these increased federal contributions on a per-student basis outweigh the state declines, but Reddick did not mention them. Accounting for them is needed to justify more public investment.

But the growth in federal spending may have fueled tuition increases. Economist Richard Vedder says that annual tuition increases only outpaced inflation by 1.26 percentage points from 1939-64, when there was very little federal involvement. But since 1978, it has been at least 3 percentage points while the federal role greatly increased.

More federal involvement may have increased costs another way. According to a 2014 American Association of University Professors report, the number of administrators increased 369 percent from 1978-2014. Many of them were added to deal with increased federal regulations.

Reddick also mentioned that “a college degree increases a person’s individual lifetime earnings by $1 million over a high school diploma.” Although true, according to George Mason University economics professor Bryan Caplan “if you adjust for pre-existing advantages like intelligence and family background, one-fifth to two-fifths of the education premium goes away.”

This is partly because a college degree signals to employers that graduates are more intelligent and hardworking than average. Such people would earn more in a world without higher education.

On community benefits, Caplan also says, “if a year of school for an individual raises earnings about 10 percent, (then) if you go and raise the education of an entire country’s workforce by a year, it seems to only raise the income of the country by about 2 percent.” Society only captures a small part of its investment.

We see this with Pell Grants as well. In 2015, NBC News reported that “little official data exists on whether they are a good investment, according to the education watchdog Hechinger Report.” Also “Pell recipient graduation rates are often considerably lower than the overall graduation rate.”

If we advocate for more public investment in higher education, we need to look more critically at the results while fully examining all the funding sources."