I was playing with an interesting mental riddle the other day: is higher education a regressive tax particularly harming the poor? I think maybe so.
To noodle with this question, consider this: who are the people most likely to attend publicly-funded universities in Indiana? These are largely middle and upper-income households. The people least likely to attend these universities are much lower incomes.
Despite Pell Grants and other aid, low income students aren’t being admitted into Indiana universities at a huge rate. In fact, IU and Purdue both rank in the top 10 of universities nationally that admit far fewer low-income students than they could be. They cite lack of state funding that forces them to look at out-of-state and other more lucrative students to keep budgets in check. More on that in a minute.
Also consider this notable impact: nearly half of the students who graduate from an in-state public university in Indiana will be gone within 5 years. We’re spending about 12% of our annual budget on higher education now, almost tied with state healthcare spending. K-12 represents almost half of all budget expenditures in Indiana as of the last budget. And millions are being spent on out-migrating people.
So students who attend an Indiana university are likely able to access loans and credit to borrow now on the promise of future income. And they are most likely to leave in 5 years, excepting some professions (law students stay in Indiana to the tune of about 70%).
This means the richest Hoosiers gets the benefit and the poorest see almost none of it. Half of those wealthier individuals will leave. Which can be for a lot of reasons, but one big one is lack of job access in their chosen degree program. The poorest among Hoosiers are paying taxes into a system with doors they cannot unlock.
Everyone who wants to take part in higher education should be able to do so. Keeping with our recent theme on conservatism for progressiveness, Republicans are lacking a vision here. Democrats can very clearly say, again, “We’ll just cover that for you”, through taxation on higher income brackets distributed down to lower income brackets. That continues to rely, however, on the idea that schools will rise to the task of admitting lower-income students, as I mentioned earlier.
Anecdotally, that seems unlikely. Schools operate like quasi-business/nonprofit/government operations with all the benefits of all three and the downsides of none. Their competitiveness for more research, more facilities, and more prestige is admirable, but is an unrelenting burden on Hoosier accessibility and incomes.
IU Bloomington and IUPUI have repeatedly called for more facility funding. To which Sen. Luke Kenley has rightly said in Ways and Means, “It’s awfully hard to justify giving you more money for buildings when they all sit empty in the morning, on Fridays, and weekends.” School officials have responded by basically saying “students don’t come to class” in those times, so they don’t bother.
Well bless their hearts. Perhaps we can take the opportunity to educate young adults that professional adults get up every morning, including Fridays, and show up presentable before 9 am.
At Ivy Tech, the situation is more dire in that they’re building buildings with a dismally low graduation rate. Here, IU and Ivy Tech are getting the benefit of government funding, but not the downsides of their business performance. Again, all the benefits of being a business, a nonprofit, and a government operation, with the downsides of none. This raises public costs, decreases accessibility for students (maybe I do want to take a class at 6 am, and again at 6 pm, and get done twice as fast), and improves nothing.
There’s no political will to get funding completely removed from public universities. But there’s not enough money to fully fund them (certainly at the state level) for everyone either.
This strikes me as a real turd of a system like healthcare where we’re dancing between two extremes so much so it doesn’t work very well at all for anyone. Like I’ve said for healthcare: either go full-free-market or fully-subsidized single payer. We’re dancing in a muddy no-mans land there and in education.
The Republican vision on this should be clear: universities have the duty and responsibility to educate young adults across all income levels in Indiana, without placing a regressive tax on anyone. Students should attend schools that they can actually afford. To get there, we should encourage schools to act on their own and remove at least one of their three protected provisions. Instead of being a business/nonprofit/government operation, remove the government portion that comes from additional funding. The 12% line-item in the budget for higher education could be used, instead, for quality-of-life improvements Indiana so desperately needs. Things like trails, conservation, streetscape improvements, and blight removal.
Or, keep the 12% line-item and lets encourage competition in the market for universities in Indiana by instead funding students, at percentage levels based on income (so that, say, students in households earning $100,000 a year aren’t getting additional funding), like we do with the Healthy Indiana Plan (HIP), which is seeing interesting and promising early results in controlling costs and buy-in. Even the Obama Administration is looking at HIP as an experiment worth having.
This is also where Republicans should be more clear about their intentions in removing federal regulation. Claims to “eliminate the Department of Education” isn’t just a move to remove a line item from the federal budget. It’s about letting states set their own standards. Foregoing discussion at the K-12 level for now and sticking to higher education, if a state such as Indiana wanted to create a curriculum for, say, bio-sciences or agri-business, it should be able to do so. The result is a mechanism where curriculum can be tailored to a state’s own strategic plans and strengths with the intended result of lowering out-migration and improving business effectiveness. Letting states and schools build market-driven programs around their own needs can help them attract and retain talent.
Like federal DOE requirements, funding would also need modified at the federal level. Schools currently have a seemingly endless bucket of money to pull from each year have little motivation and cause to lower and check their spending, further ballooning costs. Again, we’re dancing in the murky middle. Either go full-subsidy for everyone (with obvious questions of where that money could possibly come from) or go full-free-market.
Republicans should be articulating that with their vision money follows students (like it does in K-12), students have buy-in to some extent (like with HIP), Indiana could create high-quality programs tailored for its own workforce and attract talent, and reduce brain drain while improving access and fairness in public costs.