“Just a Little Easier”: The Middle-Class Economics of Higher Education

Higher education got a lot of press in the 2015 State of the Union Address. President Obama alluded1 to two major initiatives:

  • America’s College Promise. Through a federal matching grant program, all Americans will be eligible for two years of community college. The aim is to “make two years of college as free and universal as high school.”
  • Simplification of higher education tax benefits. Most existing tax credits and deductions for higher education will be consolidated into an expanded and permanent American Opportunity Tax Credit. The Student Loan Interest Deduction will be eliminated, as will tax liability on loans forgiven under income-based repayment plans. Tax benefits of educational savings plans will be substantially curtailed.

These two proposals join the Department of Education’s proposal for the PIRS college ratings system, an idea initiated in the 2013 State of the Union Address and still in development, to make, potentially, the most significant package of federal policy on higher education under the Obama Administration.

On one level, these proposals are driven by affordability, one of the Administration’s themes from the 2013 SOTU. Free community college is a solution to the problem that “too many bright, striving Americans are priced out of the education they need.” The proposal to increase taxes on the wealthy (proposals, mind you, to close loopholes and make capital gains tax rates somewhat less preferential rather than increase income tax rates) will generate tax revenue to “help more families pay for childcare and send their kids to college,” an allusion to the expanded AOTC. That’s connected to access as well; the PIRS proposal shows that the Administration views access barriers as mainly economic.

These proposals, though, don’t seem to do much for those who face the affordability and access problems most acutely. I’ve argued elsewhere that PIRS helps mainly traditional students from middle-income families, the ones who have an actual choice among non-elite schools. Neither do the tax proposals, which have negligible effects on enrollment and retention, help low-income students. A tax credit reimburses tuition-payers for an up-front cost, at least four and perhaps as much as 18 months after it was paid. That eases the burden on people dipping into savings to pay for tuition, but does nothing for those without savings. They will need some way to pay tuition now, and even with expanded refundability the AOTC won’t do that.

The benefits of America’s College Promise are more diffuse, but still fall significantly enough on middle-income families that it can’t be described as a program for the least well-off in society. Critics of the program note that the bulk of the cost of attending most community colleges is, rather than tuition and fees, the cost of living and opportunity costs of not working; others note that the poorest students already have tuition covered by Pell Grants. There seems to be disagreement as to whether Pell would stack with ACP funds to then cover cost of living for students already receiving it. That likely depends on how the program is structured, which is beyond the details we have now. Even with the structure most favorable to low-income students, though, the program will provide benefits to many more middle-income students who probably would have attended anyway.

There is also a more ominous challenge to making community college “as free and universal as high school”: high school is, in most of America, neither free nor universal. Students must provide their own supplies nearly everywhere, and the penalty for a student without paper or pen (let alone iPad and home computer) is too often failing grades for not submitting assignments or being kicked out of class for “being unprepared.” Spending four hours a night on homework is 20 hours a week that a student can’t spend working. That isn’t what I’d call free.

President Obama, in the address, praised the “all-time high” national graduation rate of just 80%. One in five students nationally—five out of the 24 students in every American high school classroom—still fails to get a high school diploma. Nearly one-third of Blacks, Native Americans, and Alaska Natives don’t graduate. Thirty-nine percent of students with disabilities fail to graduate. Twenty-nine percent of District of Columbia residents. Thirty-nine percent of men in Mississippi. Forty percent of Blacks in Utah. Forty-four percent of Whites in Hawaii. Forty percent overall, 50% of Latinos, and 63% of Native Americans in Nevada. More than three-quarters of students with limited English proficiency in Arizona or Nevada.

High school is most certainly not universal. Free community college will likely be even less so, especially for members of all kinds of disadvantaged groups. One of those groups, as experience with Medicare expansions shows, will be residents of states that don’t want to kick in their own money.

Many commentators have argued that the structure of these programs is built around political viability. Broad benefits create a political coalition that will protect the program, ensuring that it will be there for those who truly need it—think of Social Security, for instance. That might make sense for America’s College Promise, where low-income students could benefit significantly even as middle-income students receive the bulk of the benefits. But that doesn’t make sense for the tax credits or PIRS, which have little value to low-income students.

The higher education proposals come as part of the larger theme of the SOTU, however: middle class economics.

So the verdict is clear. Middle-class economics works. Expanding opportunity works. And these policies will continue to work, as long as politics don’t get in the way.

…That’s what middle-class economics is—the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules. We don’t just want everyone to share in America’s success—we want everyone to contribute to our success.

President Obama did not propose a package aimed at remedying income inequality; income inequality is not an inherent evil to be eliminated. The recent growth of inequality is excessive because it represents a departure from sound economic policy that provides fair economic opportunity and rewards those who work to take advantage of it. He proposed policies that would make the Horatio Alger myth of American middle-class success that much more achievable: “your chance to graduate ready for the new economy, without a load of debt.” That is, a chance to work. The tax proposals are not aimed at soaking the rich but at ensuring that their wealth is not due to their political advantages. The goal of the policies announced in the State of the Union Address was not lifting up the impoverished—as the President said, “These ideas won’t make everybody rich, or relieve every hardship. That’s not the job of government.”—but securing the middle class.

The higher education proposals are part of this agenda of middle-class economics. In The West Wing episode “20 Hours in America, Part 2,” White House Communications Director Toby Ziegler’s poignant conversation with a fellow stranded traveler captures the aim of these education policies perfectly.

I never imagined at $55,000 a year, I’d have trouble making ends meet. And my wife brings in another 25. My son’s in public school. It’s no good. I mean, there’s 37 kids in the class, uh, no art and music, no advanced placement classes. Other kids, their mother has to make them practice the piano. You can’t pull my son away from the piano. He needs teachers. I spend half the day thinking about what happens if I slip and fall down on my own front porch, you know? It should be hard. I like that it’s hard. Putting your daughter through college, that’s–that’s a man’s job. A man’s accomplishment. But it should be a little easier. Just a little easier. ‘Cause in that difference is… everything.

Matt Kelley’s ambitions are modest. He isn’t looking for wealth or a life of ease. His life is supposed to be hard, and he’s up to the challenge. But it should be achievable. His son should have teachers from whom he can learn to be a pianist. His daughter should be able to go to Notre Dame. He—as a man, one must note—should be able to do this. Not easily, of course. He, too, should have to earn the opportunity for his “bright, striving Americans,” his “responsible students,” to have lives “just a little easier” than his. The difference between being able to earn that success through hard work and failing in spite of it truly is, in President Obama’s middle-class economics, everything.

I am certainly not one to make the best the enemy of the good. Policies that make the lives of most Americans just a little easier, that make the difference between success and failure for most Americans their own effort rather than the lottery of birth, are preferable to many alternatives, including the status quo. I support these proposals.

And some of these policies, targeted as they are at making the lives of the middle class just a little easier, will make the lives of some of the least well-off, “the least of these, my brothers,” just a little easier as well. Free community college will certainly allow students to attend who would not otherwise, among other ways by reducing the up-front costs that students must pay when they enroll. Students who borrow to pay tuition can still claim the American Opportunity Tax Credit. Students who see that a shady for-profit college is a low performer with poor labor market outcomes may go to their local community college instead.

Free community college is especially important because it decommodifies at least a segment of higher education. As long as higher education is a good that must be purchased on a market, even one whose price mechanism is as heavily skewed as that for higher education, then education will accrue to those who already have advantaged positions in society. I firmly believe that there are far too many things that have been commodified, and changing that in education is where I would start. That truly is radical, because decommodification makes income inequality far less relevant to people’s lives.

But make no mistake: these proposals, individually or collectively, are not The Solution to poverty. Higher education is not the solution to poverty, full stop. These proposals are not—and are not intended to be—proposals that will radically remake the American social fabric. Even if an associate’s degree becomes universal, jobs have to be available; otherwise we have simply changed the winners and losers in what is still a zero-sum game. Certainly the President’s vision of middle class economics acknowledges that, but it will have to deliver as well.

Mark Kelley’s story continues in the next episode of The West Wing. In “College Kids,” Toby and Josh push to make tuition fully tax deductible, a move that will save Kelley nearly $10,000. They convince Sam Seaborn, the Deputy Communications Director, and the C.J. Cregg, the Press Secretary, to support the plan. “We’re going to throw these guys out,” Toby says decisively of their election opponent, “’cause they want to say no.” C.J. says that they should take the idea to the Chief of Staff, while Toby triumphantly calls Kelley to let him know about the plan. But the plan eventually dies in a budget deal to end a government shutdown. The President says maybe next year if it can be made revenue-neutral. But next year never comes, and higher education is never again addressed by the Bartlet Administration.

While this proposal is certainly better than the status quo, it can’t be the ending point. “Just a little easier” to send your kid to college is not everything to people who don’t know where their meal will come from, who have to work 80 hours a week for a roof over their heads, who, instead of sacrificing a vacation or a new car to pursue education, have nothing left to sacrifice. The middle-class economics of higher education is at best a drop in the bucket, at worst a cynical insult to too many Americans. A good proposal that puts free college education on the political agenda is not enough. Nor is settling for marginal improvement rather than true progress. I’ll take this for a start, but more is needed, both within and beyond higher education.

Neither must the good become the enemy of the best.

Notes:


1. The speech itself had little detail on any policy, and should be viewed as supplemented by a number of White House fact sheets released in the weeks leading up to the speech. The release of the President’s budget proposal in early February will flesh out much of this, especially the tax proposals.