Biden Tuition Plan Boosts Colleges, Not Students

“Revolutionary.” That’s how Terry Hartle, senior vice president for government relations at the American Council on Education, describes President Joe Biden’s new higher education plan. “It is very different than anything we have ever tried to do before in postsecondary education,” he declared.

That’s a nice sound bite, but the president’s plan actually relies on the same dubious principles that have guided U.S. higher education policy for the better part of a century. It would boost federal subsidies intended to lower the cost of higher education for people who can’t afford it — but which have turned out to let colleges spend more money (rarely on teaching), raise tuition prices and make higher education harder for ordinary Americans to afford.

The Biden plan offers variations on the same theme. If the new administration wanted to help more poor kids afford college and to halt rising college costs, it would instead trade in open-ended higher education subsidies and aid in return for a single item — an increase to Pell grants. These help students without inflating tuitions because they provide a fixed amount of money, targeted at families below a certain income level. Colleges that raise costs would risk losing out as recipients hunt for places they can afford.

By contrast, the Biden Families Plan proposes to make community college free to everyone by having the federal government subsidize up to 75% of the costs. And there are new subsidies for students who attend “minority serving” institutions, including historically black colleges and tribal schools.

All these proposals, along with $10,000 per student in loan forgiveness also proposed, would encourage higher education institutions to keep raising prices. Some costs would be passed on to students, others to taxpayers. None of the Biden plans try to put the brakes on runaway spending.

According to a recent report by the National Association of Scholars, the total number of administrators and staff at 50 U.S. colleges and universities grew by roughly 50% between 1987 and 2018, driven by a 94% increase in executives and other professionals. The report notes that “universities devoted increasing amounts of their resources to government relations, marketing, and public relations, at the expense of undergraduate instruction.”

Even poorer schools like community colleges and historically black and tribal institutions, which may appear worthy of financial support, hardly seem to be effective at helping low-income students achieve their goals. According to the National Center for Education Statistics, of the students who enroll in community college, only 26% earn an associate’s or bachelor’s degree after six years. And despite the fact that 81% of students entering community college say they want to get a BA, only 14% of students earn one in six years. The graduation rate at tribal colleges is less than 20%, at historically black schools only 35%. None of the proposed new federal largesse would be tied to better outcomes for students.

There’s not much evidence to support claims that the reason for these abysmal graduation rates is that students lack the money to stay in school. At community colleges, where tuition for the 2018-19 school year averaged only $3,660, “56% of independent students and 50% of dependent students at public two-year colleges did not pay any part of their tuition and fees,” according to calculations by the College Board. And since the average grant aid and tax benefits provided to full-time students at public two-year institutions is about $4,050, the net tuition and fees to attend these schools is actually a negative number, minus-$390.

Biden’s plan does include a slight increase in Pell grants, something that might actually help poor kids. Colleges would still have to compete for those students’ dollars and administrators might think twice about how much extra they want to tack on to expenses.

Unlike the open-ended federal tuition subsidies that provide more money for more expensive schooling, Pell grants have always had a maximum amount attached to them. At around $6,000, these grants have been able to make a significant dent in public university tuition, and completely cover the cost of community colleges. But they were never going to cover much of the expense of attending elite private schools.

There’s nothing wrong with offering a safety net for kids who want to pursue higher education and can’t afford it. But dumping piles of money on schools that have been terrible stewards of the money Americans have already given them won’t help anyone.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Naomi Schaefer Riley is a resident fellow at the American Enterprise Institute and a senior fellow at the Independent Women's Forum.

©2021 Bloomberg L.P.

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