It is sad-and ironic-that as higher education struggles with sharp cutbacks in state support and declining endowments, federal legislation (No Child Left Behind) holds out the promise of preparing all children academically for further education. I believe the rising demand for higher education that may result from enhanced K-12 academic preparation, coupled with demographic, political and economic forces operating on higher education, put the country well on its way toward a potential-if slow motion-train wreck.
Many pieces have to fit together to enable increased access to quality, affordable higher education in the next decade, and rather than congruence of the necessary factors, I see disarray. Furthermore, given current economic and political realities, solutions will be neither easy nor inexpensive. Because I believe that most Americans continue to support equal educational opportunity, all of us who care about wise and essential investments in human capacity must find a way around the dilemmas sketched below.
The pieces have to fit together
State governments and private philanthropy have combined historically to provide the supply-side of higher education, while the federal role has focused on underwriting student demand through grants, guaranteed loans, and work study. The last great expansion of supply occurred during the years of the baby boom generation, and few new colleges or universities have been built since, or are planned to be built.
Furthermore, state government appropriations that underwrite below-cost tuition have been declining as a share of institutional budgets for two decades, and the trend looking forward is even more ominous. Since 1979, we have been shifting the cost of higher education from the general taxpayer to the student and his or her family, and the latest round of double-digit tuition increases, induced by falling state support, accentuates that trend.
One result is that the federal government can no longer assume the presence of low-tuition colleges and universities available to low-income students receiving Pell Grants. As a consequence, any increase in the Pell Grant maximum that one might squeeze out of a constrained federal budget is unlikely to keep pace with current or future tuition increases, meaning that the effective role of Pell Grants as an access program will diminish. A brief history may help.
From the early 1980s until the late 1990s, appropriations for Pell Grants increased very little, and the share of college costs covered by the grants declined sharply. In the relatively flush budget years of the second Clinton administration, the maximum grant increased from $2,700 in 1997-98 to $3,750 in 2001-02, and today it stands at $4,050. This gain occurred at a time of relatively modest tuition increases, and did boost college affordability for the lowest-income students. (It should be noted that these gains came at the cost of rising deficits in the program, estimated at $1.85 billion in the current budget. Deficits are an overhang against further expansion.)
Looking ahead, however, the relationship of tuition and Pell Grant increases is virtually certain to reverse, with sharp tuition increases unmatched by rising appropriations-a rule of thumb is that a $100 increase in the Pell Grant maximum costs roughly $350 million. And this change will occur at a time when the number of potential Pell-eligible students will be growing significantly.
Loans will continue, therefore, to be the financial source of last resort for low-income students, who increasingly will come from minority and first-generation college-going families. For many of these potential students, success in college is not a sure thing, and consequently one can understand the reluctance of many to take on large burdens of debt. An alternative is full-time work and part-time attendance, but the prospect for such students successfully completing degree programs is poor.
Incentives for universities and states
If the federal tools to ensure access seem wanting, can we rely on states or institutions to pick up the slack? Alas, colleges and universities, having been thrust more directly into market competition in recent years, will focus more on quality, prestige and competitive position as measured, for example, by the annual rankings of U.S. News & World Report magazine. Many of the less selective institutions, public and private, will see the opportunity provided by larger applicant pools to enhance selectivity, and will allocate much of their institutional aid on merit awards to attract higher ability students.
Furthermore, most public institutions will embrace higher tuition as the only way to replace reduced state subsidies. Community colleges will be the institutions of last resort for many capable students, but one can foresee these institutions becoming overburdened and overcrowded, and less likely than now to work as transfer programs to four-year colleges. (Many of the non-transfer technical/professional programs that produce highly marketable graduates already ration access because of constraints of equipment, space and trained faculty.)
Most states have long since dropped enrollment-driven funding formulas, and thus increased enrollment does not automatically bring additional resources as was the case in the 1960s and 1970s. As a result, few public institutions have an incentive to grow substantially. Institutional self-interest is not likely to enhance the access agenda.
States, meanwhile, are coping with structural deficits, and have shown for 20 years a tendency to cut higher education budgets sharply when under duress. The rapid and projected growth of Medicaid expenditures promises to absorb much of whatever growth in state revenues occurs in the next several years. States increasingly look to higher education as an economic development tool, creating merit-based aid programs to reduce the brain-drain of their most promising young citizens out of state.
Merit-based programs are modeled to varying degrees on the first such program, the Georgia HOPE Scholarship. To date, 12 states have created such programs, which provide free tuition or substantial grants for students who attend in-state institutions and who earn relatively high grades in high school, or achieve high SAT/ACT scores, or some combination thereof. The Georgia program has no income limit for recipients, and most of the funds go to students from middle- and upper-income families. These programs are immensely popular politically, and governors take great pride in creating them. They respond to concerns over affordability, not access, and thus do little to help the capable student from a low-income family whose academic performance does not qualify for a merit award.
It appears, therefore, that neither institutions nor states have a fundamental interest in ensuring access for the capable but average student with few financial resources. Indeed, only the federal government has the incentive and the resources to underwrite the access agenda, but as noted earlier, the pieces do not mesh well enough to meet the challenge posed by rising numbers of low-income high school graduates seeking some form of postsecondary education.
The era of low-tuition public higher education is coming to a close, which vitiates the ability of Pell Grants to ensure access. Tuition tax credits do little for the poor, and loans at the level required to meet rising tuition and related costs will be seen as prohibitive by many potential students. Space limitations in colleges and universities are another constraint that will increasingly bind. Distance learning has yet to prove its viability as a mass form of education, and experiments such as the Western Governors University have thus far failed.
For-profit colleges such as the University of Phoenix, DeVry and others perform effectively for some students, but are unlikely to grow to sufficient size to encompass all potential new students. Financial constraints also limit the number of students who can afford a for-profit institution.
Efforts to improve K-12 schooling will be undermined if substantial numbers of students see their way to college blocked by financial, admission or space constraints. The first lesson, then, should be that the focus on No Child Left Behind (NCLB) must go beyond the years of elementary and secondary schooling to include access to higher education. School reform must be considered in a K-16 framework if it is to succeed. Reauthorization of the Higher Education Act must include linkages to NCLB.
The second lesson I draw from the above analysis is that substantially more public funds will have to be invested in student support if we expect to enroll in college the students that NCLB promises to prepare. In a state and federal political environment that seeks tax cuts rather than tax increases, this proposition will not be popular, but I see no way around it. One option would be a federal-state agreement that would relieve some of the financial burdens at the state level, e.g. Medicaid, in return for increased state support of higher education, and hence reduced tuition levels. Pell Grants could then be a more effective vehicle to finance broader access.
A second option would be to modify and expand the federal SSIG/LEAP program to provide an incentive for states to shift support to need-based financial aid, perhaps undercutting the incentives to start or expand merit-based aid programs. A related option would be federal incentives to blend both need and merit into state financial aid programs.
What these examples demonstrate is that effective and efficient access to higher education requires coordinated activity on the part of states and the federal government, and it is these linkages, never strong, that are increasingly frayed and ineffective. The absence of a forum for such discussion is one of the inherent difficulties of federalism.
Finally, I would be remiss were I not to mention higher education's responsibility for preparing quality K-12 teachers, as that is a central feature of both federal and state policy. Consistent with my economic approach, I should note that as the price of higher education rises, more and more students will be unable or unwilling to enter low paying professional occupations such as teaching.
As a dean of a school of education, I am charged with attracting from within the University of Virginia undergraduate population a number of bright and talented students to prepare for the teaching profession. As our tuition rises, and as students borrow more, their willingness to enter the teaching profession, or stay with it if they do begin, is undermined.
It constantly amazes me that, in a nation committed to capitalism and the trite but true observation that, "You get what you pay for," we continue to underpay teachers and yet expect to attract large numbers of high caliber people to the occupation. This line of thought suggests that we need to implement loan forgiveness or tuition remission for students who commit a period of time to the teaching profession. This option is yet another way that NCLB and the reauthorization of the Higher Education Act might be usefully connected.
David W. Breneman is dean of the Curry School of Education at the University of Virginia. This article has been adapted from a paper delivered at the Aspen Institute Congressional Seminar on Education Reform, in February.