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Funding Higher Ed: Three Solutions

University Business, Feb 2013

America’s higher education system is becoming less affordable for the middle class citizen, due in large part to the loss of public funding. In fact, notes The Campaign for the Future of Higher Education in its introduction to a set of three working papers offering possible viable solutions, between 2006 and 2007 alone the rate of public investment in public higher education dropped by 12.5 percent. Sharp tuition increases have become the substitute, with tuition for California public institutions increasing by 98 percent between 2006 and 2001.

The CFHE organized a telephone briefing this week to draw attention to the working papers and stimulate more thoughtful, fact-based national conversation about funding higher education in the U.S.

Bob Samuels, president of the University of California-American Federation of Teacher and a lecturer at UCLA, spoke about his paper, “Making All Public Higher Education Free.” It explores an idealistic approach to college access, but approaches the concept of free education through an estimate of what the actual cost would be. His research found it would have taken $127 billion to make all of higher education in America free in 2009-2010. Although a large sum, this is actually a lot less than what is currently being spent. In 2010, he notes, the federal government spent $35 billion on Pell grants and $104 billion on student loans, and the states spent a total of at least $10 billion on financial aid for institutions and another $80 billion for direct support of higher education, according to his report. In addition, that same year, the federal government lost close to $40 billion in tax revenue that could have gone directly to higher education. State governments, meanwhile, are losing billions of dollars in tax revenue each year because of 529 College Savings Plan programs.

The second paper, “Financial Speculation Tax,” by Rudy Fichtenbaum, president of the American Association of University Professors and a professor of economics at Wright State University (Ohio), proposes a modest tax on financial speculation transactions, such as trades in stocks, bonds, and other selected financial instruments, that could be expected to yield somewhere between $265 billion and $354 billion each year. It’s a tax that many countries, including the United Kingdom, currently have and that the U.S. had from 1914 to 1966. Also, proposals for such taxes have already been introduced in both the House and the Senate, he points out. Fichtenbaum suggests allocating $75 billion of the revenue generated as additional funding for public higher education. That would be quite a boon, considering that states spent about $72.5 billion on higher education in FY2012. His proposal has $28 billion going to the first priority of cutting tuition to ensure that higher ed is more affordable for more families, and the remaining $47 billion going toward increased instructional spending. The priorities there, he says, are to step up advising efforts so students are more likely to enroll in classes in which they can succeed, and to hire more tenure-track faculty to increase instructional quality and graduation rates, as well as to reduce degree attainment time.

The last paper, summarized as “Reset Button,” is formally titled “Financial Options for Restoring Quality and Access to Public Higher Education in California: 2012-2013” and was written by Stanton A. Glantz and Eric Hays, both of the Council of UC Faculty Associations. Glantz is a professor at UC, San Francisco and vice president of the Council, and Hays is executive director of the organization. They propose that California’s higher ed system be restored back to where it was at the turn of the millennium, at a cost of $6.405 billion, or $48 per median income tax paying citizen. This would restore the California Master Plan for Higher Education, which promised low cost, high level higher education for all. “Since 2000, politicians in California have cut funding to higher education, resulting in prices increasing and quality decreasing,” Glantz said during the conference call. Their state is used as a test case for the idea that adequate higher education funding is easily within reach throughout the U.S. As the paper notes, if taxpayer support for higher ed is not restored, student costs at four-year public universities would need to increase significantly to get back to the level of per-student resources available in 2000-2001. Students at the University of California, for example, would have to pay $10,491 more per year, for a total of $23,721, to attend.

The conference call promoting the papers was purposely held on February 12th, Abraham Lincoln's birthday. In 1862 Lincoln signed the Morrill Act, which established land grant colleges. Alice Sunshine, communications director for The California Faculty Association, said that “today, we are missing the commitment and courage that Lincoln and Morrill had.” The authors share the common belief that generating dialogue and conversation on the financial crisis of higher education will allow for new ideas and improvements. 

Complete versions of the papers presented are accessible here.