How Diminished Funding to Higher Education Worsens Income Inequality

Summary: Huge cuts in state funding for higher education have left our premier public universities to thirst after the money well to do families from out of state are able to pay for a selective education. As a consequence, membership of moneyed families in upper socioeconomic echelons is solidified and the portal for entry by lower income youth is contracted.

This prototypical college campus is in Ann Arbor, students streaming to class. Small groups linger and visit on the margin of walkways; individuals check their phones on the run. Leaves mostly gone, the nights regularly dip below freezing, the edge of winter. The nostalgia of fall return to classes has faded and classes are deep into their content. Learning and lives proceed on the ground of one of America’s premier public universities, Michigan. No doubt many undergraduates look forward to Saturday’s football game.

But look a bit more closely and this university established for the benefit of the youth of Michigan enrolled 43% of the freshman class from outside of the state; parallel figures for other recent classes range from 34% to 41%. Moreover, and more damningly, this engine of social mobility has strayed from its mission; fully 10% of the student body comes from families in the top 1% of wage earners, while only 16% of the student body comes from families in the bottom 60% of wage earners. This, at a university in recent history lauded (and condemned in other quarters) for its battles on behalf of affirmative action.door-1587863_1280

Lest we assume Michigan an outlier, a Jack Kent Cooke Foundation study found that 24 similar flagship public universities in the US enrolled at least 40% of their freshman students from out of state; 11 enrolled more than 50% of freshman from out of state. As in the case of Michigan, the soaring admission of out of state students from well to do backgrounds also has left the flagship universities of Virginia, Vermont, and Alabama with disproportionate populations of higher and lower income students.

What is going on here? The putative social escalator, the great American public university, seems of late to have become an engine of burgeoning social inequality, echoing similar scourges in other walks of American life.

According to Politico, in the late 1960’s the state of Michigan covered 70% of instructional costs at the University of Michigan, but by the late 1990’s the state’s share had shrunk to 10% (adjusted for inflation) or roughly the same dollar amount as thirty years before. Since 2002, state support has declined another 30%.

On such a starvation diet, Michigan and similarly hungry universities around the country cast an eye for cash, and alighted on the bread and butter afforded by the out of state student. Today tuition and fees for an out of state student at Michigan has soared to $47,476, or into the same stratosphere as private selective universities. For capable and ambitious out of state students for whom Harvard is academically a relative stretch, the reputation and intellectual quality of a flagship public university such as Michigan is a solid second best, and their parents, aspirational for their kids, are willing and able to pay the piper. Top heavy numbers of well to do out of state students is apparently what has been required to balance the budget.

In the bargain, the university enrolls a highly capable set of undergraduates, which creates a higher bar and barrier for in state student application.

Meanwhile, tuition for residents of the state has jumped from $600 in the 1970’s to $14,826 currently, in a state staggered by income stagnation and general economic woes, and which cast its lot in the Trump column in 2016.

Faced with mounting tuition and selective admission standards, low income students in the state of Michigan feel repelled by a Wolverine future, despite the real availability of sufficient financial aid and recent efforts by the university to market that financial help in more readily graspable garb. Likely this is an image the school will be hard pressed to improve; damage has been done.

The burden of income inequality burbles up in other ways. Wearisomely, study after study pound the same point – kids with income class advantage usually from quality schools outperform lower income youth from inferior schools. Until those tables are evened — among other ways by amplified state funding that alleviates the incentive to admit large numbers of out of state students, and creative changes in admissions policies (low income affirmative action anyone?) — capable lower income youth whose application numbers are handicapped by their stint on the lower end of the economic scale will be elbowed out by the higher income youth that the University of Michigan currently and disproportionately ingests.

This matters because graduates of selective universities more readily gain entry into the upper echelons of America’s socioeconomic structure; low income youth have become increasingly diverted from these halls of passage.

Stepping back into a broader perspective, it is tempting and probably accurate to see the decline of funding for higher education in the broad sweep of ideological conflict, the battle for the soul of government, between the adherents of “safety net”/activist/regulatory government on the left and the believers in limited government on the right.

Conservative activists and their affiliated politicians have had success cutting taxes and limiting government reach, in the process eviscerating the ability of government on different levels to balance the fortunes of those lower on the socioeconomic scale. Moreover, their efforts have aggravated income inequality, as in these present tales of higher education. In the unexamined belief that rising waters lift all ships, such advocacy seems blind to the capacity of market forces to set up perverse incentives such as those that appear to have led the University of Michigan astray.

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2 Responses to How Diminished Funding to Higher Education Worsens Income Inequality

  1. Tony Barclay says:

    Glad to see you pursued this theme after the Michigan story appeared a few weeks back,

    • schooldog says:

      Timely focus, as the GOP seeks also to cripple graduate programs by taxing as income support by universities for graduate students who teach and carry out other necessary tasks.

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