Is Free Tuition the Handwritting on the Wall?

The following article was published by EducationDive on why free tuition at public institutions may be the only way to achieving a nationally competitive workforce inclusive of the 99%.

https://www.educationdive.com/news/is-free-tuition-the-writing-on-the-wall-for-college-as-a-personal-expense/532666/

By LaSonya Moore, assistant professor of special education in the College of Education at the University of South Florida St. Petersburg, and Edward Renner, courtesy professor, USF.

Is the announcement by the NYU School of Medicine of free tuition the beginning of an inevitable evolution toward free public higher education in the US?

Since the 1960s, according to the National Student Clearinghouse Research Center, college enrollment has steadily increased until it peaked in 2011 at 20.6 million students. Over the next six years there has been a steady decrease in enrollment, down to 18.8 million in the Fall of 2017. Over this period there has been a series of institutional failures, and the creditworthiness of institutions of higher education has been downgraded by Moody’s.

Over the 56 years that the Higher Education Price Index has been computed by the CommonFund, it has outpaced the Consumer Price Index by 160% and has maintained that pace over the past six years with 2017 showing the largest one-year increase since the recession of 2008. One result has been a non-sustainable growth in the size of student loan debt. 

In partial response, curriculums have been adjusted to be more practical and job centered, increased focus has been given to student recruitment and retention, and colleges and universities are now competing for transfer students.

While strategic planning is certainly required, it alone will not be sufficient if the six-year graph is capturing an inflection point that is the beginning of a long-term trend. Such a divergence of enrollment and costs is related to two additional issues, for which there is growing awareness.

Disruptive innovation

The limiting case for the two trend lines is consistent with the prediction by Harvard Business School Professor Clayton Christensen that more than one-half of higher education institutions will be bankrupt over the next decade or so, following Circuit City, encyclopedias and others as the victims of “disruptive innovation.” Looming in the background is an economic crisis for educational institutions similar to that experienced in 2008 by financial institutions. With the continual expansion of Open Educational Resources (OER), the availability of Massive Open Online Courses (MOOCs) and independent certification of competence, there is reduced educational need for a traditional college experience. 

While the doubling rate of knowledge is difficult to measure, the suggestion that half of what one learns over a four-year degree will be outdated by graduation suggest an alternative role to be filled by nonresidential, remote digital continuing education.

Income, wealth and social disparities

In practical terms, if cost continues to rise, fewer students will be willing to assume increasing amounts of student debt. Over-recruiting of marginal students and diluted standards may provide temporary numerical relief, but in the longer-term deepen disillusionment and public confidence, setting the stage for a future larger crisis. Such a crash is increasingly likely with limited annual economic growth in a time of rapidly increasing national debt.

Projecting increased costs and reduced enrollment to their limit provides a graphic picture of the richest 1% bringing a ton of money to the Registrar of the remaining institutions to purchase the additional social, cultural and civic benefits of the four-year college experience — while the 99% are bystanders looking on.

Beyond tinkering

If disruptive innovation and even greater inequalities are the outcome of sticking with the status quo, then tinkering with enrollment strategies, student loan forgiveness, deferred maintenance, more adjuncts and practical job training will not be sufficient.

If the goal is to ensure the K-16 pipeline, a much bolder vision will be required.

Free tuition for all at public institutions may be a necessary current policy debate to have in the U.S. The pending economic crisis facing public institutions could offer the opportunity of following other Western democracies by restructuring financial support as a public cost, rather than bailing out the status quo as was done in 2008 for the financial system. This would create an education system where excessive wealth cannot provide, nor poverty deny, access to public higher education, creating a new system where only competitive ability and personal motivation are the currency of exchange for entry. Such a change may be the only way to achieving a nationally competitive world-class workforce that is inclusive of the 99%. 

Without radical thinking, the handwriting on the wall suggested by the NYU Medical School announcement of free tuition may signal the beginning of end of the dead idea that knowledge is a commodity to be purchased as a personal expense, rather than a national investment in the future of the nation itself.

Student Debt Crisis

This essay may be reproduced.
Reprinted in the St. Petersburg Times, Nov. 18, 2011, 13A.

For Sale: One Kidney. $30,000 plus all expenses. White, male, BS with dual major in physics and mathematics.

I personally know this student. He is serious, not crazy.

As an honors student, he worked part-time for 4 years. He has been entirely self-supporting and has graduated with a $30,000 student loan debt.

In his words: “I only need one kidney, and I want to start out even.”

In the US this past year, the total amount of outstanding student loan debt reached one trillion dollars. This exceeds the total amount of outstand credit card debt. The average college student in the class of 2010 at a public non-profit university will graduate with a student loan debt of $25,500. It is even higher for those attending for-profit educational institutions.

It did not always use to be this way.

Historically, the US made investments in education as the way to secure the future of the nation, and to provide the equality of opportunity that defined the “American Dream.” All of that started to change in 1980s with the political philosophy of reducing the size and the social responsibilities of government.

Since 1982 college fees and tuition have increased over four times the rate of the consumer price index and nearly twice the cost of medical care. After the financial crisis of 2008, every other form of debt has decreased as people made adjustments to harder times. The exception is student loans that have grown larger as college tuition and fees increased to compensate for loss of government support for education.

When too many students owe more than their degree is worth, or lose their ability to pay the debt, this financial bubble will burst -- as it surely will with suppressed wages and a 9.1% unemployment rate. Similar to the housing bubble, we will be asking all over again, how could this be?

The answer is the same for student loans as it was for mortgages.

The college loan industry is following the same path as the mortgage lenders by recruiting students who have small chance of success. They end up with debt and no degree. These loans are similar to the toxic mortgages. Other students take out loans on the promise that economic growth will make the loan affordable in the future. The grim reality is that this is no longer true, for student loans as well as mortgages. The illusion of economic growth by financing the present through debt is over, for individuals as well as for governments.

The student loan bubble is an even a more dangerous symptom of the failure of our national political process than was the mortgage bubble and the resulting financial crisis of 2008.

Education, science, health, roads and all of the other things that have made the American Dream possible, and made our country the envy of the world, are not commodities, they are public investments in the common welfare. My student’s kidney, and all that it symbolizes, is not, cannot and should not become a commodity.

Student loans are the only type of debt that cannot be discharged in a bankruptcy, except under rare and unusual circumstances. The financial industry that created the student load bubble has successfully lobbied for laws that exempt such loans from the capacity to be discharged. With accumulated late payment fees and interest charges they are a more toxic financial “product” then the mortgage crisis.

It is not an individual’s responsibility to have to choose between debt and one kidney, or between forgoing education to avoid debt. It is, however, the responsibility of government to be a buffer between the public good and predatory Wall Street practices of creating artificial financial “products” to make money at tax payer’s expense, or as cumulative debts to be paid for by our children.

Protecting the quality of public life is the primary responsibility of government. That is why we pay our taxes. We are not going to solve our social issues of public education, health and human welfare by reducing government. It is our government, and it is our civic responsibility to have it have it serve the end of human progress; this is the definition of a democracy.

It is not the primary function of government to further the accumulation of power and wealth by corporations, and the control of government by the wealthy; this is the definition of a plutocracy.

The choice between the two is ours to make. It will be the defining choice of our lifetime.

This is what the “Occupy” movements around the world are about.

Professor Renner teaches in the Honors College at the University of South Florida. This blog is based on his podcast series “Forums for a Future” at www.kerenner.com