Degrees of Inequality and the Failed Policyscape of Financial Aid

A consistent theme in American discourse today is that higher education is in crisis. The common refrain is that a college education is not worth the cost, with spiraling tuition costs pricing college out of the reach of middle class Americans and the result neither relevant or able to compensate for student debt. But what if the problem is not existential but rather a function of government policy?

Degress of InequalitySuzanne Mettler, the Clinton Rossiter Professor of American Institutions in the Government Department at Cornell University, has written a powerful book about American financial aid policy for the past thirty years. Somewhat disingenuously titled Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream, Mettler’s work is a study of federal politics and policy. She uses history, broad macroeconomic analysis, and a critical eye to address an extraordinarily important question that lies at the heart of our common concern about academia: why has our system of higher education gone from facilitating upward mobility to exacerbating social inequality?

Her answer to that question has several components: a failed policyscape, due to heightened partisanship, that makes updating regulation and practice an impossibility; increasingly ineffective financial aid, most notably in the Pell grant awards; diminishing support from state governments for higher education, massive subsidies and support for for-profit higher education, and poor decisions by traditional colleges and universities. Taken collectively, these shape a system in which more affluent students are able to navigate college and graduate education, insuring a greater chance for lifetime earnings and success, while less well-off Americans are increasingly trapped in a cycle of low graduation rates and constrained opportunity. In brief, the system as it now operates exacerbates inequality.

Mettler’s focus is on federal policy and the rise of for-profit education. She is not interested in probing what forces led particular state or private not-for-profit institution to raise tuition. She does not explore individual college’s financial behavior; nor does she narrow in on student’s financial decision-making. When referenced, both colleges and students are treated as relatively rational actors, responding to changes initiated by the government.

Missing from the book – refreshingly – are all the usual suspects in the “higher education is in crisis” literature. Mettler does not care about curricular reform, the pay of faculty or administrators, cultural studies or the role of career offices. The Spellings Commission and accreditation have no place in her book. Mettler is relentless in tracking the flow of money.

The villains in the study are for-profit institutions and the data she marshals is damning. The for-profits have been extraordinarily financially successful. In nine years, revenues at the University of Phoenix increased from $12 million in 1994 to $1.34 billion in 2003. However, the for-profit education industry has consistently been much less successful with students, posting consistently worse outcomes than traditional public education. Graduation rates are higher at public institutions. The for-profits lead in student debt and student default rates.

Mettler goes into great deal explaining how this happened. Her history looks closely at policy development. For example, colleges and schools were required after post-WWII reforms to make sure that a percentage of tuition did not stem from government support. This policy was designed to protect veterans from predatory institutions and to make sure that federal student financial aid dollars were not wasted. While the threshold of 25% non-governmental tuition was set originally, the number has steadily declined. In 1998 it was set at 10%, a change that has been extremely helpful to for-profit education. Colleges are no longer campus-bound, either, allowing for-profit distance education units to grow tremendously.

Mettler also details how for-profit education has positioned itself as an effective player in highly partisan Washington. In the 1990s for-profits began to organize and lobby heavily. The messaging of the for-profits has been very effective with Republican leadership. The sector emphasizes practical education that is student focused without any pretense of elitism. For-profit education is not about exploration; it is about meeting market demands. The sector has also skillfully aligned itself with several key Democratic leaders, championing itself as an avenue for minority and under served students. Mettler hammers home that for-profit education, with up to 90% of its tuition revenue coming from federal government financial aid, is a creature dependent upon government policy.

Degrees of Inequality proposes a provocative counter-history to explain the current state of higher education. It is a compelling argument that explains much. However, it is not a complete explanation. Histories of policy often do not connect effectively with broader political and social movements. As studies they can accurately identify players, goals, and strategies – and yet miss out on environmental shifts that tilt the playing field. Mettler is a strong scholar and she rightfully recognizes the importance of heightened partisanship. She does not, however, direct attention to the ideas that define that partisanship.  As an illustration, her analysis of how and why funding for education decreased at state levels is incomplete with each state having a somewhat different history and set of circumstances.

I highly recommend Degrees of Inequality. Wrestle with it and wonder why traditional higher education has enjoyed no place of prominence in federal education policy development. Who have been and are the champions of not-for-profit higher education? Reconsider all the articles and posts you may have read about financial aid policy and regulation. At the time, were you aware that they spelled a bonanza to the for-profit education industry? And have you considered that when many Americans think of higher education, they draw little distinction between for-profit and not-for-profit sectors? Whether it was Mettler’s goal or not, Degrees of Inequality is a wake-up call to traditional higher education.

David Potash

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