Tuesday, April 1, 2014
Subprime Higher Ed and Washington DC
Like everything else in our nation’s Capitol, higher education has become a deeply polarized issue. Although the Higher Education Act is supposed to be re-authorized this year, no one thinks that it will get done. On one side, you have the Republicans in the House who are upset with the Obama administration’s efforts to regulate high-debt, low-peforming for-profit schools, and on the other side, you have some progressive Democrats trying to find ways to reduce and refinance student debt. While technology is no longer being presented as the solution to all problems, there is little discussion of a comprehensive plan to help higher education. In fact, most politicians argue that we still have the best system in the world, so all we need to do is just improve access for some excluded groups.
On a more positive note, the United States Student Association’s legislative conference did show that students are very concerned about student debt and the fact that students are paying more and getting less. There is a new coalition (Higher Ed, Not Debt) that has been formed around the student debt issue, and it has brought together several important groups and progressive political leaders, like Senator Elizabeth Warren. I am hoping to work with this campaign to tie the issues of student debt, contingent faculty, instructional quality, and higher ed funding together.
When people ask me why I think anything might change for the better in higher education, I argue that the student debt issue threatens to affect so many individuals and families that something will have to be done regarding how we fund and regulate universities and colleges. As Suzanne Mettler stresses in her book Degrees of Inequality, much of this debt is being driven by the rise of for-profit schools who have used their profits to capture Washington regulators and politicians. These schools now take in collectively a quarter of all Pell grant funding and a large part of the current GI bill. At some point, the failure of profit-colleges to graduate students could push the government to re-invest in public higher education.
Of course the irony of the for-profits is that many of them receive more than 90% of their funding from the federal government; thus instead of being the free market alternative to public higher ed, these institutions embody the rise of corporate welfare within the context of the fall of public welfare. Mettler documents how the Obama administration’s attempts to regulate this industry has been countered by not only the free market evangelists of the Republic party but also progressive Democrats who believe that for-profits are the only schools catering to low-income African-American and Latino students. Like the bipartisan push for subprime loans to minority populations, this cashing in on the poor is a bi-partisan affair: the liberals want to do something for disadvantaged people, and the conservatives want to support the corporations seeking to turn public money into private profits. Let’s hope that when the student loan bubble bursts, the Fed will bail out the students and not the banks.