The Public Option for Higher Education

(Ewing Galloway via Wikimedia Commons)

Top-level lawmakers are finally turning their attention to the student debt crisis. On August 22, President Obama announced a plan to “fundamentally rethink how higher education is paid for in this country.” A few weeks before, Senator Jeff Merkley of Oregon declared that he would introduce a bill that would spread Oregon’s “Pay It Forward” loan repayment proposal across the nation. No doubt, there is a widespread hunger for a new way forward in education funding, and it has only sharpened in the wake of the sorry spectacle, earlier in the year, of legislators squabbling over how much to raise interest rates on federal loans. But the well-intentioned proposals floated by Obama and Merkley fall far short of a sustainable, effective solution to the problem.

Before dealing with these plans, let’s be clear: making college affordable would hardly put a dent in the federal budget. If we subtracted all of the tax exemptions, outlays, and programs that currently subsidize public education, only $12.4 billion in additional annual funding would be needed to cover the current tuition at all two and four-year public colleges and universities. In other words, the cost of a genuinely “public option” that would turn education into a binding democratic right turns out to be not much more than a rounding error in the federal budget—less than one percent of yearly spending. That’s all it would take for the federal government to join the long list of other countries that fully fund higher education. By way of comparison, U.S. taxpayers are currently subsidizing too-big-to-fail banks to the tune of $83 billion a year. If we just turned off that faucet we could provide public education completely tuition-free with $70 billion to spare.

A fully-funded system of colleges and universities is the first step towards claiming education as a vital social good. Eliminating tuition at public colleges would allow educators and policy makers to focus on what really matters: creating an educational system that benefits all of us, not just those best equipped to pay. Obama’s recent proposal further entrenches the market-driven belief that higher education is a consumer commodity or a private financial investment, to be judged on its returns to individuals. He aims to rank colleges by factors such as price, graduation rate, and earnings of graduates, and to tie federal funding to those outcomes. Leaving aside how colleges will scramble to game this measure, such a myopic approach to defining ‘value’ would almost certainly further skew university funding in favor of encouraging degrees such as business and finance that generate the maximum return on investment. And it does nothing to address the labor crisis in higher education, where almost three quarters of all teachers are off the tenure-track.

Obama also proposes to universalize income-based repayment. This would at best be a palliative. Monthly payments would be lower, but they could endure for much longer, accruing more interest and leaving the poorest students on the hook for the largest amounts of debt service. All in all, the presidents’ version of higher ed reform is as needlessly complex as Obamacare and moves us further away from the goal of a democratic education commons.

The Oregon approach, soon to take its place on the national stage, is a modified income-based repayment plan. It waives upfront tuition costs in favor of extracting some percentage of graduates’ income (likely 1.5 percent for two-year and 3 percent for four-year colleges) for a number of years (likely twenty-four) after graduation. Even though the details are still to be worked out, it is clear that the plan has a number of shortcomings, not least that it is an open invitation for states to make deeper cuts and further offload their responsibilities. But at root, Pay It Forward preserves intact the neoliberal structure of education funding as an individual burden, borne most heavily by those least able to pay.

Obama’s and Merkley’s solutions are slightly more humane than the current system–which has seen tuition costs almost sextupling since 1985. They are a preferable variation of Milton Friedman’s model of “human capital” contracts, now being put into practice by ex-Citigroup CEO Vikram Pandit and other start-up entrepreneurs looking to pay for students’ education in return for a percentage of their future earnings. But the embrace of these plans by some progressives reveals how diminished our political imagination has become.

Many of Dissent’s readers enjoyed access to free or token-cost public education. The City University of New York and the University of California system were provided at low or no cost for much of the postwar period. But the transfer of fiscal responsibility from the state to the individual over the past thirty years has been ruinous; some states, such as Arizona and New Hampshire, have cut education funding by 50 percent since 2008 alone. Cash-strapped institutions that provide essential public services have been forced to turn to Wall Street for funding, and the banks, in order to guarantee their investment, insist that the cost of these services go up. It’s no wonder that the aggregate student debt has risen to almost $1.2 trillion, or that anger and desperation are running so high.

The best that Washington’s lawmakers seem able to offer is to make it a little easier for the indebted to pay off their creditors. In the eyes of our elected representatives, student debt is wholly legitimate, repayment is a duty of good citizenship, and education is best approached as a form of job training. They have no other solution to the problem facing a generation of people, many of whom face a stark choice between making payments on ballooning debts or supporting themselves and their families. All of that is unacceptable, especially in a year that will see the federal government extract a cool $51 billion in profit from its student loan programrevenue that won’t go back into education but will be used to pay off war debts. Everyone now knows that “the tuition is too damn high,” but why is it not common knowledge that making public education completely free would cost so damn little?


Andrew Ross, Michael Cheque, and Luke Herrine are members of Strike Debt