A Horrible Idea to Pay for College
This month I’m once again participating in Bryan Alexander’s online reading group. This month we’re reading Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream by Sara Goldrick-Rab. We’re through the first few chapters, and a phrase in chapter three caught my eye.
When the odds of non completion are high, and economic returns are uncertain, it is reasonable for a person to hesitate to invest in college.
As we think about the place of higher education in society and the investment involved (both real and in opportunity costs), this calculation is hard to ignore. It speaks to the decision every student (young or old) makes when looking at colleges (or college generally). But what if this calculation wasn’t made by the student for their own benefit? What if it was made by investors looking to make a buck?
That’s exactly what some conservatives are touting as a “novel” way to pay for college. The Chronicle article is certainly worth a read, but let me if I can summarize the idea. Conservatives would like students who need money to pay for college to enter an open market where investors will fund their college experience in return for an agreed upon percentage of their income for some period of time. As outlined in the article, Beth Akers, a senior fellow at Manhattan Institute, describes this:
First and foremost, Ms. Akers says, the concept “addresses a problem in higher education” — students’ need for both financing and risk protection — “but it does so through the private markets instead of the federal government.” That, of course, appeals to small-government advocates.
From what I can tell this means that investors would develop some kind of score for potential students (big data to the rescue) that would be used to determine how much the student would pay after they graduate and for how long. On the surface this seems like it could be a good thing (hint, it isn’t), but it’s important to remember that these are investors, not charities. Think about the kinds of things that might make college students risky investments. Things like being poor (i.e. Pell eligible), being a minority, having to work while in school, being under-prepared, having an out of favor major, etc. These are all things we know put students’ future earnings at risk. Going back to Dr. Goldrick-Rab’s quote at the beginning, when the odds of non completion are high, and economic returns are uncertain how do you encourage investors to invest? By a higher return at the end (i.e. more money from the student).
And that’s what makes this idea so horrible. The open market will reward the white, affluent student with low rates while punishing the exact students we want to help lift up. Treating college as a path to indentured servitude is bad enough (but better than the school to prison pipeline I guess), but making it more expensive for the most vulnerable isn’t just bad policy, it’s a moral outrage.