The American system of higher education is in crisis. Over the past 30 years, it has gone from facilitating upward mobility to exacerbating social inequality. College-going, once associated with opportunity, now engenders something that increasingly resembles a caste system: It takes Americans who grew up in different social strata and widens the divisions among them. The consequences are vast, including differences among graduates in employment rates and lifetime earnings, in health, and in civic engagement.
The rise of for-profit colleges, changes in federal student aid, and the demise of state funds for public colleges and universities have helped produce these circumstances. But at its core, this transformation represents a political failure, a breakdown of representative government that no longer provides effective mechanisms by which Americans can pursue a better life. Higher-education policies that worked well in the past to mitigate inequality are still in place, but they have deteriorated and gone off course. Thus we are squandering one of our finest accomplishments and historic legacies, a system of higher education that was long characterized by excellence and wide accessibility.
Today we see college degrees as investments that yield benefits only to individuals. But when the United States was founded, public officials promoted higher education because it mattered for the public. They strongly believed that by encouraging and subsidizing advanced learning, the nation would foster the knowledge, creativity, dynamism, leadership, and skills that would spur economic growth, technological innovation, and social advances. As Benjamin Franklin remarked in a proposal that led to the creation of the University of Pennsylvania: "The good Education of Youth has been esteemed by wise Men in all Ages, as the surest Foundation of the Happiness both of private Families and of Common-wealths. Almost all Governments have therefore made it a principal Object of their Attention, to establish and endow with proper Revenues, such Seminaries of Learning, as might supply the succeeding Age with Men qualified to serve the Publick with Honour to themselves, and to their Country."
In the national drive to promote higher education, those broad public purposes have always also been entwined with deeply cherished ideals. Thomas Jefferson believed strongly that education provided the training for democracy, writing that "no one more sincerely wishes the spread of information among mankind than I do, and none has greater confidence in its effect toward supporting free and good government."
As a young nation in the 18th and 19th centuries, the United States used land grants to the states to spur creation of a vast network of colleges and universities. By the eve of the Civil War, the nation boasted 250 institutions of higher education. The Morrill Act of 1862 created a new educational model that combined traditional liberal-arts education with training in agriculture, the natural sciences, and teaching. By their very mission, and through their expansive offerings in practical fields of study, the land-grant colleges reached out to a broader segment of the public than did the institutions that preceded them. Congress enacted a second Morrill Act in 1890, leading to yet more new institutions, including 17 historically black colleges.
The next great phase of the nation’s leadership in higher education occurred after World War II, when a series of landmark laws expanded access to college, making them affordable to a wide swath of the population. The GI Bills, the National Defense Education Act of 1958, and the student-aid programs that were part of the Great Society all enabled large numbers of Americans to become the first in their families to go to college. During these decades, states also invested heavily in higher education, expanding public two-year and four-year colleges and universities and requiring students to pay minimal tuition. By 1980, such institutions enrolled nearly 80 percent of college students, making the American dream a reality for them.
That stream of policy developments, in combination with rising high-school graduation rates, yielded powerful effects on American society. In 1940, only one in 20 Americans held a four-year college degree; by 1977, that number had soared to one in four. Advanced education, in turn, stimulated upward social mobility. Male veterans who studied using the GI Bill in many cases experienced leaps in occupational status: A longshoreman’s son became a lawyer a cobbler’s son became an engineer.
It is well known that those with greater education and income participate more in civic life. Nonblack male veterans who used the education and training provisions of the GI Bill took part in twice as many civic organizations and one-third more political activities during the postwar era than those who did not. Black veterans who utilized the benefits became a leadership cadre for the civil-rights movement. Members of the second generation benefited from the boost the benefits gave their parents. Women who utilized student loans and Pell Grants gained more-advanced education than those who did not, and subsequently they took part in politics at higher rates, helping close the gender gap in political involvement. In myriad ways, these kind of financial-aid policies mitigated economic and political inequality.
But something happened beginning in the 1980s. Those born in the quarter-century following World War II possess higher rates of college education than do people in their generation elsewhere in the world, but that is no longer the case for subsequent generations. Eleven other nations—not only in Western Europe but including Poland and South Korea—have leapfrogged over the United States in the percentage of their young obtaining four-year college degrees.
More important, stalled progress in the United States has occurred primarily among people earning low to moderate incomes. Indeed, people in those groups are barely more likely to graduate from college than are those in their parents’ generation. Making matters worse, this trend has developed during the same decades as economic inequality has widened and a college degree has become more important than ever in determining Americans’ employment opportunities and income.
And that doesn’t even take into account the kind of degree attained. Today it matters increasingly not only whether you go to college, but also what type of college you attend. Many needy students are sequestered into separate and inferior institutions, including the for-profits, from which they are likely to emerge without degrees and with crushing levels of debt.
What has gotten the United States off track?
Not solely the usual suspects. Many observers blame colleges, pointing to tuition that has skyrocketed since the 1980s, far outpacing inflation. In fact, few students who attend elite private nonprofit colleges and flagship public universities—which advertise high sticker prices—pay full fare. Even if they do, what they pay and borrow in student loans usually amounts to a valuable investment.
Despite considerably lower price tags at the public colleges that three out of four Americans students attend, however, soaring tuition there is a dire problem, consuming substantially more of the average family’s income than in the past and making enrollment unaffordable for many. As resources have become stretched thin at public institutions, class sizes have swelled, more classes are taught online or by adjuncts and fewer in person by full-time professors, and colleges offer less academic support for students.
The worst problems occur at for-profit colleges, which charge far more than the public institutions and at which nearly all students borrow—on average, far higher amounts than in other sectors. Graduates of such colleges struggle to find jobs that pay them enough that they can afford their loan payments, so that 23 percent of borrowers default within three years. Many students are left worse off than if they had never attended.
Still, tuition increases do not occur in a vacuum. The long history of federal and state support for higher education demonstrates powerfully that students have never been charged the full cost. Government has always played a supportive role, in effect subsidizing the cost of tuition through a wide array of public policies. As recently as the 1980s, individual states contributed most of the funds needed by public colleges, thereby managing to keep tuition low for state residents. Rather than cite tuition increases alone to explain the crisis in higher education, we need to consider what has become of government’s support for students and institutions.
Public policies function far less effectively than before to ameliorate inequality in college-going.
Lackluster college-graduation rates are also often blamed on students themselves, or on inadequacies in elementary and secondary education. Yet there is nothing new in the greater advantages the wealthy have in finding their way to college and in succeeding once they get there. Here again, we need to consider what has changed over the past 40 years.
The real problem is that in recent decades, public policies have functioned far less effectively than they did in the mid-20th century to ameliorate inequality in college-going. This policy failure is manifest in three areas.
First, federal student aid—though more costly than ever—no longer promotes opportunity as well as it did in the past. That is in part because policy makers permitted Pell Grants, for students from low-income families, to fall behind in value as tuition escalated, leaving students with no option apart from borrowing more. Despite increases in Pell Grants since 2007, the benefits still fail to keep pace with rising college costs. The value of the maximum grant in covering tuition, fees, and room and board at the average four-year public university fell from nearly 80 percent in the 1970s to only 31 percent in 2012-13. Also, beginning in the late 1990s, lawmakers fashioned tuition tax policies that provide a bonus to many American students who would attend college regardless of whether they receive aid. The upward redistributive tilt of these policies has grown; new ones since 2009 deliver their largest benefits to households with annual incomes of $100,000 to $180,000.
Second, state governments no longer treat public higher education as a high priority. The vast network of state universities and community colleges continues to enroll 73 percent of all college students, but between 1990-91 and 2009-10, state governments decreased funding for them by an average of 26 percent in real terms—even as operating costs increased. To close the gap, the colleges have raised tuition, which has skyrocketed by 113 percent in real terms between those years. In effect, public higher education has become increasingly privatized as students and their families have been left to shoulder the increased costs.
Third, lawmakers have permitted the for-profit education industry to capture a huge portion of federal student-aid funds, despite its poor record in serving students. In fact, for a decade beginning in the late 1990s, lawmakers relaxed restrictions on the sector, making it even easier for it to take advantage of federal largess. They did this even though these institutions generally lack the established forms of self-regulation and quality control that have long been in place at most public and private nonprofit colleges. Despite the absence of such self-governance, advocates of more-extensive public oversight for the sector have faced an uphill battle. Efforts by the U.S. Department of Education to regulate for-profits produced a watered-down set of rules in 2011, most of which were discarded by a judge one year later.
In mountains of reports, economists and education experts have documented the lag in American college-going; they have shown a commensurate rise in inequality in college attainment. They have yet, however, to explain how and why the United States has permitted these developments to occur.
Americans have not become less supportive of college students than they were in the past; public-opinion trends reveal at least steady support and, by some indicators, a growing commitment to promoting college attainment. Neither is the problem of governance attributable simply to the textbook features of the American political system, such as the complexities of the separation of powers, federalism, and the power of interest groups. Rather, the profound political dysfunction underlying trends in higher education—as in many other areas—derives from particular features of contemporary American politics.
Today we dwell in what I call a "policyscape," a political landscape densely cluttered with a vast array of policies established at earlier points in time. They do not function as effectively as they once did. In some measure, that’s because circumstances have changed while policy makers have failed to update the policies accordingly, a phenomenon that has been called "drift." For example, as noted, tuition has grown for reasons unrelated to government’s role, and student aid has failed to keep pace. But it’s also the case that existing policies themselves generate effects that, over time, can reshape their development—and in some cases, take them off the rails of their intended purposes.
That process may be caused by any of three dynamics: design problems, unintended consequences, and lateral effects. Design problems occur as inherent characteristics of policies act to foster their growth and expansion or, conversely, to make them vulnerable to deterioration or contraction. Pell Grants, for example, lack automatic cost-of-living adjustments; their value necessarily diminishes as inflation occurs unless Congress manages to raise rates through the cumbersome and contentious annual budget-appropriations process. Student loans, by contrast, grow easily: Lawmakers need only agree to allow more students to borrow more money. The imbalance between grants and loans, paired with rising tuition, has led to increasing student indebtedness.
Unintended consequences happen when policies yield side effects that their creators did not anticipate: for example, by influencing the activity of individuals or organizations beyond those they aimed to affect. In some instances, such policy consequences may reshape the political system itself, through "feedback effects" that can be salutary or perverse. Scholars have found that for-profits, in particular, respond to the availability of federal aid by raising tuition. Federal student-aid policies may also prompt industries to engage in behavior that economists call "rent seeking," attempting to influence the political system to extract profits from it. For-profit companies have invested hefty amounts—through campaign contributions and lobbying—in enhancing their political capacity in order to pressure lawmakers to maintain and extend the policies that benefited them so lucratively. One of the reasons the Department of Education’s 2011 rules regulating for-profits were so weak was because industry lobbyists swarmed the White House repeatedly while advocates for the general public crowded into just one meeting.
Lateral effects happen when policies are changed as a result of the impact of other, unrelated policies. Higher-education spending in the states, for instance, has been effectively displaced by spending in such areas as elementary and secondary education and health care. In part, mandatory features compel states to provide services in those areas, while aid for colleges is "discretionary" and therefore more vulnerable to budget cuts.
The extent to which lawmakers engage in policy maintenance depends on the political context in which they dwell.
What becomes clear is that when left alone, policies can develop over time in ways that undermine their ability to achieve their goals. That doesn’t mean that we are doomed to accept forces beyond our control. Rather, a fundamental task of contemporary governance is policy maintenance: Lawmakers need to monitor policies, assess whether repairs are required, and conduct reforms as needed. As former Senator Nancy Kassebaum, Republican of Kansas, explained, "Public programs—just like any other programs—need to be managed."
But the extent to which lawmakers engage in policy maintenance depends on the political context in which they dwell. Maintaining policies effectively requires political leaders to recognize and value the basic purposes of public policy. It demands public officials who are creative thinkers and flexible negotiators. Landmark higher-education laws were created in the mid-20th century typically at the initiative of Democrats, who controlled Congress, but they enjoyed a fair amount of bipartisan support. Two of the most prominent pieces of legislation were signed into law by Republican presidents, Dwight D. Eisenhower and Richard M. Nixon. Following the 1980 election of Ronald Reagan, a new, conservative approach to governance emerged. For a time, higher-education policies were left untended, as lawmakers couldn’t agree on how to maintain them. But by the late 1980s and early 1990s, reform initiatives began to appear, emanating from both sides of the aisle and gaining bipartisan support.
Since the 1994 elections, however, constructive bipartisanship has all but vanished from the political landscape. Both chambers of Congress have grown more polarized than at any time since at least the early 20th century, if not the Civil War and Reconstruction eras. Both parties have become more internally homogeneous and unified, and moderate Republicans have all but vanished. This partisan environment has not only hindered chances that public officials will enact bold new landmark laws; it has also proved detrimental to their performance of even the basic tasks necessary to maintain existing ones.
Making matters worse, when factions within Congress have managed to unite in the past two decades, the interests they have responded to most reliably have been those with the deepest pockets. Money lubricates political machinery that is otherwise stuck in gridlock—as in 2011, when a significant number of Democrats in the House of Representatives united with Republicans to oppose regulations for for-profit colleges. Such bipartisan "exceptions to the rule" endow the political system with features of a plutocracy, as if a wealthy class effectively controlled the government.
In the case of higher education, this behavior ensures that shareholders and top management of businesses that benefit from student aid are represented, while the needs of ordinary Americans fail to gain attention. The pairing of our dense policyscape with the politics of polarization and plutocracy has amounted to a tragic mismatch with effective governance. If we continue along this dysfunctional path, as a nation we will continue to slide away from the greater equality and more widespread upward mobility that characterized the mid-20th century.
For the United States to effectively expand opportunity to low- and middle-income Americans, enabling them to enroll in college, gain a good education, and graduate while not taking on an unreasonable amount of debt, we must redirect resources and invest in institutions and policies that promise to be most effective. Several principles should guide us. First, we need to eliminate ineffective forms of student aid to make better use of available resources. Tuition tax breaks could be scaled back, saving substantial resources to be used, instead, to make a greater difference in expanding graduation rates.
Most important, we need to amplify the voice of ordinary Americans in the policy-making process.
We also need to reduce drastically aid to institutions that serve students poorly, or structure the allocation of aid in ways that require greater institutional accountability. At a minimum, lawmakers could build on past and existing regulatory efforts to scale back the revenue for-profits receive. They ought to insist that the education department put into effect rules it has issued for limiting incentives for admissions recruiters. They should enact strong prohibitions on aid to colleges with low loan repayment rates, an approach that would affect some institutions in other sectors as well.
At the same time, we should strengthen community colleges that have accommodated less advantaged students without the intensive recruiting efforts used by the for-profits, and served them well at a much lower cost. In the hierarchy of trade associations representing institutions of higher education in Washington, those advocating for community colleges are the least powerful. The sector found a ready advocate in President Obama, only to have Congressional leaders eliminate a major provision promised to them when the student-aid package was combined with the health-care-reform law in a reconciliation bill.
Next we must revitalize the historic partnership among the federal government and state governments and private nonprofit institutions, to ensure that all parties do their part. In recent years, the federal government has increased its commitment to students, but the vast majority of states have declined to uphold their end of the bargain. In fact, the availability of federal student aid inadvertently rewards states that do less than others to offset the costs of tuition at public colleges, because more federal money flows into their coffers when tuition costs are higher. In effect, states that game the system this way rely on taxpayers elsewhere in the nation to finance what they are unwilling to support for their own citizens. Federal policy makers must pressure the states to restore their commitment. One small program, the College Access Challenge Grants, did tie states’ eligibility to evidence that they exhibited "maintenance of effort" in financing their public-university systems. Congress should seek a means of extending that principle.
In a parallel way, federal lawmakers should explore how to reward private nonprofit colleges that enroll and graduate high percentages of low-income students, and how to penalize those that make limited efforts to do so. Some private colleges have distinguished themselves by actively recruiting low-income students, providing them with ample financial aid, and supporting them in ways that help ensure high graduation rates. Other nonprofit colleges, however, either recruit few such students or do little to supplement the Pell Grants of those they do admit. Instead they use funds from their endowments to offer merit aid to students with high test scores—a strategy that may well raise their rankings in U.S. News & World Report but tends to favor the well-off. Or they recruit less meritorious but high-income students who will pay close to full fare. National political leaders should expose those colleges.
Congress should also consider offering Pell bonuses to colleges that operate on a tight financial margin, enroll high rates of Pell Grant recipients, and have high graduation rates. Conversely, wealthy colleges that offer little extra aid to Pell recipients, while showering it on affluent students, ought to be penalized. In January, President Obama, facing legislative gridlock, used the bully pulpit instead, convening college presidents and asking them to commit to expanding access to low-income students. Such attention to these issues is promising, but changes in public policy are required to really get the nation back on course.
Ultimately, we need to make student aid more generous by, for example, boosting Pell Grants substantially. But such changes will not be sustainable or effective unless federal lawmakers can induce states and the private sector to act as responsible partners in higher-education financing, and if they restrain the for-profits and bad actors in other sectors from abusing its availability.
Finally, taking action on these major issues cannot occur unless we find ways to make elected officials more responsive to ordinary Americans and defuse the forces of polarization and plutocracy. Certainly many scholars have suggested institutional reforms that could help weaken partisanship. An obvious one: Further alter the Senate’s filibuster rule, so that bills can once again be routinely enacted by a majority rather than requiring a supermajority of supporters.
We also need to limit the advantage that powerful interests have over ordinary Americans. One way to level the playing field is to prohibit lawmakers from accepting campaign contributions from lobbyists and their organizations. Another is to slow down the revolving door, introducing longer waiting periods and more-comprehensive limits on the extent to which individuals circulate back and forth among positions in Congress, industries subject to regulation, and executive agencies charged with regulating those industries.
Most important, we need to amplify the voice of ordinary Americans in the policy-making process. An exception to the way citizens are usually left out of the loop shows how much civic activism matters: Once young people began to participate more in the elections, in 2006 and 2008, lawmakers responded by improving federal student-aid policies. Easing restrictions on voting, making it easier to register and vote on the same day or in advance of elections, and related reforms could go far to increase voter turnout. In addition, we need to seek ways to create, for a new era, civic organizations that will allow citizen voices to be heard between elections.
In 1947, the President’s Commission on Higher Education warned: "If the ladder of educational opportunity rises high at the doors of some youth and scarcely rises at all at the doors of others, while at the same time formal education is made a prerequisite to occupational and social advance, then education may become the means, not of eliminating race and class distinctions, but of deepening and solidifying them." Today those words offer a strikingly prescient depiction of higher education in our times.
From the Northwest Ordinance through the enactment of Pell Grants, the United States found innovative ways to promote higher education so that it would serve crucial and ambitious public purposes. It is up to us to find ways to do so again.
Suzanne Mettler is a professor of government at Cornell University and a fellow at the Century Foundation. This essay is adapted from her new book, Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream (Basic Books).