Movement in the University of California Privatization and Tuition Debates

A few things to note in the public college access debates, particular with tuition and privatization.

1.  First, the Daily has a story (that provides the graph above) arguing that there will be a “bill of $422,320 in today’s dollars [for] the class of 2034.  If college costs keep rising as they have for the last three decades, the inflation-adjusted price of four years.”

What are the politics of runaway cost inflation?  Health care has this level of cost inflation, and it brought together huge coalitions to react (and counter-coalitions to fight reform).  Education hasn’t.  Why the difference?  It could be that health care impacts an older, more politically engaged group.  It could be seen as a move to a view of the government that just compensates the poor rather than one that provides goods broadly; related, we see health care as a right in a way that higher education isn’t, equality of opportunity issues aside.  Issues that are seen as having a federal component versus state ones?  That health care was never completed, while public education grew up with the country, hit a high-point with the Cold War, and is now in retreat?  I’m not sure.

2. This was matched by a brief debate, proposed by a student group at UC-Riverside, over a plan to that formalize an indenture contract, because they would “abolish tuition and replace it with post-graduation payments equaling 5% of their income for 20 years.”  As friend-of-the-blog Connor Kilpatrick noted in an email, it’s 5% of “their wages (not investments)”, making for an even more regressive system than in the original document.  Funny how investment income gets excluded in these deals.  Given a median wage of $45,000 for someone with a college degree, that’s ~$187 a month – not exactly cheap.

As an economic historian noted to me once about indenture and student loans, one of the fundamental facts about the brutality and intensity of early-American indenture was that workers who were brought to America under indenture could either run off to the frontier and reinvent themselves, or would die from disease.  Since lifespans were short and erratic indenture required intense upfront work, and since the ability of exit was ever present, indenture needed to take place in a Goffman-like total institution.

Nowadays one can’t “escape” students loans – especially through the legal code, which takes place through how the state sees taxable income – and lifespans and lifetime earning capabilities are quite long and smooth, meaning one with replicate an indenture situation without the more overt coercive elements of bonded labor or indenture.  Meaning bidding 5% of future earnings for access to public goods – a system violating vertical and horizontal equity in taxation along with all kinds of fairness rules as we understand them – looks like a brand new thing.

3.  Will the battle be taken to the states?  President Obama, in his State of the Union speech, said “Of course, it’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets…So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down.”

Ralph Nader has an op-ed (which quotes Rortybomb!) arguing against runaway public tuition, and proposing that University of California students “qualify an initiative on the ballot that would set tuition at affordable levels, or even become like some leading European countries where free schooling extends through the university years…Ordinarily, without lots of money for paid petitioners, this can be a formidable challenge. But with millions of community college and university students reachable on campus, combined with their families, this should be a fast process and a piece of cake.”

For the California activists, has this initiative issue been discussed before?  What are your thoughts?

4.  This is a choice, and it was a choice made before the crisis.  During the original Occupy event and California tuition protests in 2009, Aaron Bady wrote a very important post worth revisiting - “The sign-up sheets didn’t have a column for students”: Mark Yudof and the UC Regents = Sacramento - which convincingly argued that “the scandal is that Mark Yudof and the regents are using the crisis of the moment to push forward a plan to privatize the UC system that has long been in the works and is geared to be permanent.”

He links through to an important 2002 essay about the future of the public university by Mark Yudof, “Higher tuitions: Harbinger of a Hybrid University?”  What is the future of the public university, and why?

As higher education comprises a smaller and smaller portion of state budgets, and as state dollars make up a narrowing slice of university budgets, the central implication is that, for the foreseeable future, public research universities will look to students to pay more of their educational costs….For me, the unvarnished truth is that the extraordinary compact between state governments and their flagship universities appears to be dead – or at least on life support….To my mind, a large part of the answer is demographics. Legistators and governors can’t help but be influenced by the graying of America….

Though we believers in the civic value of education may lament it greatly, with the wage premium widening, education today is increasingly seen as a private, rather than a public, good. Consequently, many legislators appear more comfortable with students’ paying higher tuition than they did in the past, tacitly encouraging students to borrow today and pay back later…Paradoxically, to continue the long tradition of broad access for students to public research universities, these institutions will have to become more like their private peers; to ensure the access for low-income and historically disadvantaged students that low-cost tuition once allowed, I believe that public research universities will have to work hard to augment funds for student aid and scholarships.

This vision of the hybrid university, being enacted in California and everywhere else across the nation, is exactly what President Obama and Ralph Nader (!) have targeted in this past week.  It is important to realize that this situation isn’t an accident, but planned and encompasses a vision of how we want education to be.  That vision can be changed.

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9 Responses to Movement in the University of California Privatization and Tuition Debates

  1. ezra abrams says:

    am i allowed to complain that that is a crappy graph, and nearly unreadable in the low quality paste you put up on your website ?
    just two examples: the chart doens’t explicitly say if values are adjusted for inflation (you shouldn’t have to read the texxt for that) and use of linear scale instead of % or log on the Y axis is misleading (to see why this is true, imagine the graph went back to 1800, when tuition was 5 bucks that would change the visual angle of the graph line a lot – it would make the graph steeper)
    how can you quote or mention yudof without mentioning his lucidrous salary
    seriously, these blankety blank ****s who soak up all this money – we have em here in MA, they are just awful people, with his salary yudof is THE ENEMY, ok he is part of the problem…
    How as an economists (someone with professional training) can you write a story on sky rocketing tuition costs without at least a link to quantitative data on the costs (is it buildings and grounds, admin, teacher salarys,…..)
    How as an economist can you miss the main point – in a free market system, by *definition* something is worth what someone is willing to pay
    In regard to private colleges, No one is forcing people to pay these tuition rates; it is not a legal requirement that you act stupid and mortgage you retirement so you can have a trophy degree for your kid
    I guess the answer is that there are enough people at the 1% level, relative to the high quality school seats, that they are simply soaking up all the seats

  2. JimD says:

    I think focusing on the UC’s and the elite private schools gives a skewed perspective. I teach at a CSU campus (the “second tier” system in California) and tuition has increased to around $6,000 per year. This is still pretty expensive for most of my students, but if you went to a community college for two years you could get a decent college education for about $15,000 total tuition for the four years.

    It’s part of the reason that I’m not very sympathetic to the “occupy” movement. The poster children for the college debt problem seem to be students who got impractical degrees from expensive universities.

    Also, I doubt an initiative limiting tuition would work very well. If the state doesn’t spend any more money, all that happens is that costs get cut and the UC’s turn into CSU’s and the CSU’s into community colleges.

    • lark says:

      Quick comment on the CSU system. I also teach in it and value the system. On every other point, I think this assertions in this blog comment are inane.
      No, a UC degree is not by definition a supplier of ‘impractical degrees’. That is not only offensive. It is actually nuts. These views are so far afield from what I know of the CSU community and its views that I doubt this posting is legit. Just to be clear: those of us who teach in the CSU system are by a vast proportion against turning the CSU system into the community college system (which I also value). We are not in favor of defunding the UC system. There is strong sentiment towards increasing funding overall and keeping tuition reasonable among the faculty.
      Clearly this person has not been on a CSU campus is he thinks ‘occupy’ is a UC movement. That is not true where I teach.

      • JimD says:

        Nowhere did I say that UC is a supplier of impractical degrees, at least no more than most. You can get impractical degrees anywhere. I’m saying that you shouldn’t run up a lot of debt getting an impractical degree. People seem to be arguing that the education system is failing because students have $50,000+ in school debt. That’s not a requirement, that’s a choice, and we should treat it as such.

        And I’m also against turning the CSU into a community college (which I also value) and I’m against turning the UC into a CSU, but if there’s no additional funding, that’s going to happen. But the only way you’re going to get lower tuition is to convince people to pay higher taxes so that the state has more revenue to spend on colleges. Passing a law that requires lower tuition will have negative consequences if there’s no money to go with it.

        However, Gov. Brown’s initiative to raise taxes basically only protects the education system from additional cuts, it won’t reverse the tuition increases. And I think there’s a good chance that even that won’t pass.

        Whether or not the occupy movement is a CSU movement was not really my point. I would expect it depends a lot on where you are. I teach in a business school and so my students tend to be more conservative. Students from other departments are protesting all sorts of things all the time. Of course, everyone is against paying higher tuition, but that’s not the same as being for OWS.

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  4. egged says:

    I’m a product of almost every level of the California educational system (except the for-profit section), having gone to community college, CSU, UC, and finally a private uni for graduate school. I’ve never heard of an actual movement for an affordable-tution proposition (maybe half-despairingly over coffee amongst grad school activists?).

    Instead, the debate is increasingly about going private – just look at UCLA Anderson, which is pushing hard to go as far as possible in this “hybrid” private-public scale.

    Meanwhile, my Scandinavian cousin asked me how much the US government would subsidize me to go back for my graduate degree, since “furthering your education makes you a better citizen that can contribute more, so the government would want to encourage that, right?”

  5. wetcasements says:

    You know what China doesn’t skimp on? Universities, among other things.

    America is basically ceding the future to them.

  6. teddyrex says:

    A question from someone who knows nothing about the economics of higher education. How do tuition dollars (and also endowment dollars) break down as far as allocation? Universities are mostly not-for-profit; where is the money going? Is this a cost problem, or something else, and if the former, what are the drivers?

    Thanks for any info.

    • JimD says:

      In part, it depends what kind of university you’re talking about. For the CSU system, the amount spent per student (in inflation-adjusted dollars) has actually fallen slightly since 1998. But because state support has fallen so dramatically, tuition has more than doubled to make up the difference.

      At other universities, particularly private ones, there are a number of different cost drivers: increased administration, increased student services, labor and health costs. Also, because universities are labor intensive, they are subject to “Baumol’s cost disease”.

      The difficulty is that the big productivity gains in universities by definition come from increasing student-teacher ratios. On the other hand, people with the money to choose what university their kids go to tend to want lower student-teacher ratios. The mix of an increased importance of higher education, a bias against productivity gains and people with money to spend on education produce elite institutions with $40,000 per year tuitions.

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