March, 2020
Washington – Last month, Stephen Burd at New America described how many public universities are failing in their mission to provide affordable higher education. This month, Third Way is stepping up with a similar analysis and a similar prescription:
[P]ublic flagship universities may expend substantial resources recruiting and offering “merit” aid to mediocre out-of-state students who are rejected from public universities in their own state, while high- achieving, low-income in-state students are neglected and often funneled to community colleges that dramatically reduce their chances of ultimately obtaining a bachelor’s degree. This is not a meritocracy. Nor is it an evil plot by universities. It is a rational response to incentives created by government disinvestment in public higher education. Policymakers at both the federal and state levels should give consideration to how they can apply policy levers to provide sustainable financial pathways that enable public research universities to flourish by serving the mission of social mobility that they were founded to serve. (emphasis added)
Both reports show how government disinvestment incentives have created this remarkably bad situation.
But the question of the moment is whether Congress is paying attention, or indeed, if it comprehends what it has done.
Even as four congressional committees work on higher education appropriations and reauthorizations this month, there are no signs that Congress wants to re-think the incentives it has created that are counterproductive to the purposes of the Higher Education Act.
The major reason for this, I believe, is that the higher education lobby sees changing any "policy levers" as regulation and oversight. It wants money, no strings. And the for-profit industries that benefit from the status quo (student loan companies and for-profit colleges) are adamantly opposed to disrupting their lucrative business models that are based on student borrowing. Collectively, they have the ear of Congress.
There is another way to tackle this, which has never been tried but should be an option for any secretary of education who really cares about higher education affordability and attainment. Monies appropriated by Congress must be spent for purposes authorized by statute. Congress has never authorized dumping federal money into financial-aid-packaging maws invented by enrollment management consultants so as to emerge as merit aid for the non-needy and larger student loan burdens for the needy. A secretary should therefore dispatch program review teams to a few selected universities to determine if federal funds are properly aiding those for which they are intended and, if not, the institutions would be put into limitation, suspension, or termination (LS&T) status until their enrollment management plans can conform to HEA statutorily expressed purposes.
If Congress remains blind to the unfortunate incentives it has created, a secretary of education can and must act, nevertheless. With two excellent reports from New America and Third Way, excuses like "we didn't know how our programs worked" are running out.
