True, state support for higher education does constitute a subsidy for the upper middle-class. Think of it as a tool to recruit and retain human capital.
Why do taxpayers subsidize public colleges? Dimitrios Halikias and Richard V. Reeves with the Brookings Institution ask that question in a new paper. Four-year colleges, they noted, are dominated by children of the upper-middle class, who can afford the cost of attendance better than most. Why should states expend scarce resources to benefit the well-to-do?
One justification for the subsidies, the authors suggest, is that higher education provides public benefits in addition to the private returns that accrue to the students themselves. They identify two benefits in particular. Universities act as ladders for social mobility, allowing students from less affluent families to improve their lot in life. And they function as laboratories for research, expanding knowledge in ways that benefit the higher population.
A stronger case can be made for public support of institutions that provide one of those two benefit, say Halikias and Reeves. Institutions that do both, they call Leaders. Institutions that do neither, they term Laggards. Those that out-perform in providing mobility, they dub Ladders, and those that excel in research they refer to as Labs.
Drawing upon data from Mobility Report Cards, which rank colleges by their ability to attract low-income students and push them up the income ladder, and university research prowess based on the Carnegie Classification of Institutions of Higher Education, they assigned each of the nation’s 342 selective, four-year, non mission-oriented universities to one of the four buckets. (They exclude Historically Black Colleges and Universities, liberal arts colleges, and military-oriented institutions. The University of Virginia, which I would classify as research institution, does not appear on the list. Neither does the College of William & Mary, which they presumably count as a liberal arts college.)
According to this methodology, Virginia has three Leaders — and not the ones who usually appear on lists of top universities. As can be seen in the table above, in order of social mobility, they are Old Dominion University, Virginia Commonwealth University and George Mason University. These institutions admit relatively large percentages of students from the lower-income quintile and relatively low percentages from the upper income quintile.
Particularly questionable from the Halikias-Reeves perspective are the low-mobility, low-research laggards: Christopher Newport University, Radford University, Longwood University and James Madison University. Indeed, LU and JMU have the distinction of ranking the lowest in the country by this measure.
Bacon’s bottom line: Regardless of what you might think of the authors’ methodology — it has its weaknesses, as I’m sure administrators of LU and JMU would be quick to point out — but it does raise a really important question. Why do states subsidize college tuition for all? If states must be in the game of subsidizing higher education, why not make all dispensations means tested?
I’m of two minds. As one who espouses libertarian principles, I see no justification to subsidize higher ed. Insofar as there is merit to the logic of the idea of social benefits to the subsidies, then one might make an argument for means-tested financial aid. On the other hand, I’m a taxpayer. I’ve paid large sums to the Commonwealth of Virginia over my lifetime, and a reduced-cost education first for me and then for my children is one of the few perks I’ve received in return (other than benefits like roads, state police and state parks available to anyone.) So, color me conflicted.
There is one important argument, however, that Halikias and Reeves neglected — at least in a Virginia context. Access to a superior system of higher education is a big draw to anyone considering moving to Virginia. If we want to attract human capital, there are few things more enticing than good K-12 schools and affordable, quality colleges. We give tax breaks and subsidies to businesses to lure them into the Old Dominion. Likewise, we subsidize higher education in order to recruit and retain the smartest and best educated employees… who, incidentally, pay the most in taxes. Unlike incentives for out-of-state businesses, Virginia citizens have been paying taxes all along — some for their entire lives.
Virginia often is criticized for spending less on higher-ed subsidies than the national average, and considerably less than our neighbor to the south, North Carolina. In an ideal world, no state would subsidize higher education, colleges would do a better job of controlling their costs and keeping tuition low, and private philanthropists would donate more money to scholarships. But we live in the world we live in, and eliminating state support for higher-ed would severely undercut Virginia’s economic competitiveness and its prospects for economic growth.
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