Paying for College

Analysis in Error

I admire John Silber’s intrepid willingness to take up the cudgels in defense of the private/independent sector. I share his concern, but some points of his analysis are misleading and some are in error.

Silber builds his case for publicaid to private institutions first upon his argument that such institutions are performing important public services, and then upon his argument that tax-supported institutions often duplicate facilities and offerings in the private sector. A closer look at the national scene will reveal that the great expansion of public higher education facilities in the past decade and a half has been mainly in areas where private colleges were either reluctant or ill-prepared to offer services. Most especially is this the case with two-year community college facilities and with special vocational training on the post-secondary level.

It is particularly disingenuous of Silber to suggest that the very significant number of professionals educated in private colleges and universities have been “trained at little or no cost to the taxpayer.” He suggests this to be the case especially with doctors and dentists educated at private professional schools. For better than a decade now, public tax dollars have provided huge subsidies for all medical education in the United States. Substantially more than one half the cost of medical education at private institutions has been covered by federal tax dollars.

There is already the beginning of an awareness, on both state and federal levels, of the desirability of channeling public support to private colleges and universities. I doubt seriously, however, that Silber’s “tuition voucher” scheme would be the best policy to achieve this objective. The free enterprise educational marketplace he suggests would be wasteful, would promote instability in the entire higher education sector, and would make planning and elimination of duplication even more difficult.

JOSEPH DUHEY General Secretary. American Association of University Professors

Statistics Casually Used

John Silber has got hold of the wrong end of the problem. The “private” colleges and universities are in trouble because their endowment and federal grant incomes are shrinking and their tuition cannot keep pace with rising costs. The “public” ones are in trouble because hard-pressed governors and legislatures, as well as the federal government research establishment, are reducing their appropriations.

But those who are really in trouble are the prospective students and their families who simply cannot afford the cost of a college education. Too many qualified students are still standing outside the doors of quality institutions. And for many of them, on the bottom rungs of the economic ladder, even a public college education is beyond reach.

A tuition voucher program seems to follow the method that Pat Moynihan described as feeding the sparrows by feeding the horses. Further, the proposal overlooks at least two aspects of reality:

First, institutional costs do not vary directly and immediately with shifts in student enrollment. Most institutional costs are fixed: plant maintenance, tenured faculty, junior faculty on multi-year contracts, etc. That is one reason why tuition meets only a fraction of the costs.

Second, undergraduate enrollments are not shrinking. They are rising and will continue to rise until 1980 throughout the country, and until 1983 in Massachusetts.

Given these two facts, a tuition voucher plan either would shift some students from public to private institutions—leaving the public institutions with unused capital and anxious applicants, but with a curtailed budget and program to offer their students—or, if the plan provided vouchers for every qualified applicant, would amount to a considerable drain on the state budget and a considerable windfall for some private institutions — and it would still fail to increase access for those who cannot afford any kind of higher education.

A more sensible solution might be the kind of scholarship program that has been enacted into law in New York and proposed in Massachusetts, providing needs-based awards to individual students with substantially higher stipends for those students admitted to private institutions.

It is not too early for overall planning to meet the higher costs and the changing needs of the new kinds of students (including older people seeking a second chance through higher education) who are beginning to trickle into the colleges. But cutthroat competition is not a good substitute for planning.

Nor, one must add, is Dr. Silber’s casual use of statistics (for example, attributing the capital costs of a major medical school to the first generation of students) a contribution to rational discussion of these very important issues.

-ADAM YARMOLINSKY Ralph Waldo Emerson Professor, University of Massachusetts

Issues More Complicated

The validity of Dr. Silber’s alternative financing proposal rests heavily on the assumption that public and private institutions provide the same education, and therefore, that cost is the critical distinction between the two alternatives. In reality, the matter is not this simple. Although there are obvious exceptions, the quality of education in private institutions is not generally available in the public system. Cost considerations aside, differential admissions standards still provide separation between the two educational markets. It is generally true that public universities are easier to enter, particularly for state residents. Dr. Silber’s removal of the income barrier will not guarantee that students can attend the schools of their choice. Many students—particularly those handicapped by inadequate secondary educations—will end up at public universities simply because higher admissions standards will exclude them from the highly competitive private colleges. It is difficult to imagine that Boston University, Harvard. MIT, and comparable private schools would lower their standards to accommodate these students on any significant scale.

Dr. Silber fails to recognize that if private universities had produced enough graduates, there would have been little or no need for publicly funded universities. The public system has expanded opportunities for higher education, thus providing higher labor productivity and upward social mobility. This of course leaves aside the philosophical considerations regarding the value of a college education to a mass market.

It is extremely difficult to measure the cost of educating undergraduates. Average university costs may be approximately $5000 per student, but the marginal cost of each additional student educated may be much lower. Allan Carter argues that colleges reach economies of scale with 1500 2000 students, and for universities this number is much larger. This is interesting, considering that in 1970 the average public university enrollment was 4823. while in the private system it amounted to 1382. Clearly, a large number of public and only a few’ private schools obtain scale economies.

There is also the vital issue of who “pays” and who “gets” under alternate higher-educational systems. As Dr. Silber is well aware, state tax dollars make up the greatest share of the differential access to funds between the two school systems; not tuition, not endowment, and not long-term capital. There is little doubt that those who approved the Morrill Act meant to collect taxes from the “haves” and to educate the “have-nots.” Regrettably, it has not worked that way. State and local tax revenues come largely from regressive taxes such as sales, excise, and property. Thus, it is not an excessive generalization to conclude that the lower-to-middle-income groups pay disproportionately to finance the public higher education of the middle-to-upper-income class. For instance, in the California system, where college attendance is more extensive than any other place in the world, the families of state university and community college students have incomes well above the median of the California population at large.

Dr. Silber does not consider this issue, and there is no reason to believe that it would be more equitably dealt with in a voucher system, since student vouchers would be based on the same tax system. Clearly, these outright subsidies would not diminish existing inequalities. In my opinion, the problem of who “pays” and who “gets” must be resolved before any decision on the voucher system is made.

I would suggest an alternative, a federal or state guaranteed loan — fund system, where students pay the full cost of their educationat whatever school. To assure a rational decision on the part of the student between public and private education, the state should move toward raising tuition charges to reflect costs more accurately. Unquestionably, the resulting tuition increases are justified by the higher earning potential of the student over his lifetime, and this also eliminates the current regressive method of financing higher education.

-JAMES M. HOWELL Senior Vice President,

The First National Bank of Boston

Costly for Taxpayers

Silber’s proposition will be abhorrent to the defenders of public education, costly for the taxpayer, and of uncertain merit as social policy. By subsidizing every student, regardless of wealth or program of study, it would ease the burden now borne by the more prosperous part of the private sector, and transfer those costs into what Daniel Bell calls “the public household,” where they must be paid by poor as well as rich, young as well as old.

Regrettably, it is easier to criticize such schemes than to devise a politically feasible plan that responds to the obvious social value of our independent colleges and universities with a strategy to help them. A few states have begun to do this. Massachusetts. alas, with the largest fraction of “private” enrollment in the nation, lags well behind New York, Pennsylvania, and (it must be said) even Texas and Georgia in this quest, despite its recent constitutional amendment easing the ageold ban against state aid to private institutions.

Yet the elements of such a plan seem clear enough: some limit on the growth of public colleges that displace, rather than augment, existing private institutions; need-based scholarships and loans that students can take to any college, public or private, and that are keyed to the price the institution charges as well as to the resources of the individual; some direct state subsidy of those private universities, or those faculties within them, that undertake to enroll state residents in state-sanctioned forms of post-secondary education. Easier said than done, but perhaps not beyond the reach of reasonable folks to devise and even to enact.

-CHESTER E. FINN, JR.

Research Associate, The Brookings Institution

New Song, Old Words

I have reservations about Dr. Silber’s voucher plan, a variant of many similar proposals. These proposals have in common that tuitions would be equal to the full cost per student of providing higher education, that students would be given the financial aid necessary to meet these tuitions, and that institutions would be wholly dependent on tuition income for their financing. These proposals have two weaknesses. One is that there is no assurance that necessary student aid would be forthcoming. The other is that students would achieve undue power and influence over higher education. When great power is exercised by any one interest, the entire academic community is vulnerable to impairment of academic freedom. The academic community is better off with diversity of control and diversity of financial sources.

Dr. Silber is right, however, in asserting that the gap between private and public tuitions, which now averages about $1700, is unbearable for the private sector, and that relief is needed. I would favor a moderate plan of aid to private institutions, one that has been proposed by the National Council of Independent Colleges and Universities (A National Policy for Private Education). Under this plan, the states (with federal incentive aid) would provide tuition grants to students of private colleges. These grants would be equal to about half the state subsidy to students of public colleges. Such grants, averaging perhaps $700 per student, would narrow the gap between private and public tuitions, and thus would improve the competitive position of the private sector without risking undue control by either government or students.

-HOWARD R. BOWEN R. Stanton Avery Professor of Economics and Education, Claremont Graduate School

Logically Defensible, Politically Unfeasible

President John Silber is right when he says that we must find the way now to balance supply and demand in higher education, and to do so without seriously weakening the independent colleges and universities. The overbuilding of state institutions can end up costing all of us more for the education of each student with little likelihood that the additional cost will produce any advantages.

President Silber’s solution for the problem, tuition vouchers issued to students (who would then select independent or state-supported colleges as they wished), is logically defensible but politically unfeasible. The community of state-supported higher education will not buy it, and that community has muscle both in the state capitals and in Washington. What’s more, there are plenty of problems with a largescale voucher plan. Not the least of them is the difficulty of the interstate flow of students. The last 1 knew. Massachusetts was trying to stop its citizens from buying cheap whiskey in New Hampshire. Is it likely to accept student vouchers from New Mexico, or allow its students to take Massachusetts money to Florida and California? Another problem is the use of state vouchers to pay the costs of sectarian education. Even if the courts allow it, plenty of people won’t like it.

The best hope of making sense of the higher education muddle is found in the further development of state-supported programs for aid to private colleges and to students attending private colleges—programs that have proliferated in more than thirty states in recent years, and that frequently encourage sensible planning for capital investment in higher education. These programs have the same problems of interstate relationships already mentioned. but efforts at interstate reciprocity are under way. An important second line of defense lies in the Federal Basic Educational Opportunity Grants program enacted in 1972. If fully funded and expanded to allow for inflationary costs, this already existing program would both open the independent institutions to a wider market of students and bring them some funds for costs not covered by tuition.

Independent higher education has not done an effective job of letting the general public know that its tuition charges don’t cover its costs; nor do parents and students seeking low-cost opportunities in state-supported colleges much care that these opportunities are generally provided by regressive taxes on people who don’t use them as heavily as those who have more and pay less in proportion. These irrationalities in our higher education system need continued attention.

In the long run, the problem that worries me the most is the distinct possibility that our major graduate research universities (both public and private) are headed for a serious decline. Much more than a voucher system is needed to forestall this crisis. We depend more than most of us are willing to admit on a small group of precious institutions that will produce the knowledge and the trained intelligence necessary to cope with the uncertainties of the future. The present policies of state and national government hold no guarantees that the major research universities will be there to serve our needs in fifteen years.

HAROLD HOWE, II Vice President, Division of Education and Research,

The Ford Foundation

Highly Misleading

The article by President Silber, although sensible and helpful in some ways, is highly misleading in others and contains a number of misstatements. I refer particularly to the paragraphs dealing with the University of Massachusetts Medical School.

After thirteen years of debate, the Massachusetts legislature created the school in 1962, not out of a “sense of shame” because we had no state school, but because the three private schools in Boston had failed to serve the needs of the Commonwealth. These needs were essentially two. The first was to provide an adequate number of physicians, properly distributed geographically and by specialty, and the second was to provide for the admission of Massachusetts residents.

Despite a growing need, the number of Massachusetts residents admitted to the state’s three private medical schools had declined from an average of over 50 percent in 1935 to 25 percent by 1965. By contrast, the proportion of state residents among student bodies at private medical schools in Pennsylvania and New York averaged 75 percent. Many medical schools have been created recently, in states both with and without private schools, as a means of controlling the admissions process, quality of education, and the number of physicians in those states.

In writing about the high cost of our school, Dr. Silber has overlooked the fact that a 400-bed tertiary care hospital is included, the only one outside of Boston to serve the Commonwealth. Other schools of the health professions can be added on at minimal expense because the hospital, library, lecture halls, and laboratories are designed to accommodate them.

When Dr. Silber referred to the cost of construction being a heavy burden on our taxpayers, he did not mention that over $18 million came from the federal government; nor did he explain that the tax which pays for the debt and debt service is not a regular tax paid by all, but a luxury tax on cigarettes, paid by those who wish to smoke. When he divided our costs of operation this vear bv the number of students, he neglected to point out that start-up costs for a medical school, hotel, or hospital are far greater than when the institution is fully occupied. Nor did he allow for the fact that 10 percent of our present budget goes to support the hospital which is nearing completion but will not be used by students until it is occupied by patients.

Last, he implied that the school will have only 400 students. While this is the immediate goal of the trustees, the school could accommodate 696 students, should this be desirable.

To date we have admitted Massachusetts residents only, and we have graduated two classes strongly interested in family practice and primary care. Because of our low tuition ($600), students from families of limited means can obtain a medical education, the primary purpose of all state schools. Despite the low tuition, half of our students require scholarships and loans. Of the sixtvfour students entering last fall, thirty-two had an average debt on admission of $2800.

We believe we are serving the Commonwealth as those who voted for the school intended. We believe that we are doing it in a way which no private school has attempted to do or ever will.

LAMAR SOUTTER, M.D.

Dean Emeritus, University of Massachusetts Medical School

Tuition Vouchers Wise

Like President Silber. I find it astonishing that persons who say they want to save the taxpayer money advocate policies that would do just the reverse. Not long ago, a United States senator argued to me that it would be better if universities did not receive private donations, and instead got equivalent financial support direct from Washington. He was worried about the tax deductions claimed by donors of large gifts to places like Vanderbilt and Boston University. A Tennessee legislator told me this winter that while even one vacancy existed in institutions built by the state, he would oppose state assistance to students attending independent colleges and universities.

Both elected representatives of the people failed to comprehend three cardinal facts:

1. To achieve educational quality at lowest real cost, we must view all our colleges and universities, public and independent, as making up one educational world. Only then will greatest public value be realized from the variety and quality of educational resources that are already concentrated in independent institutions and that are annually attracted to them.

2. In the distinction admirably made by Dr. Silber, “price’' and “cost” are very different concepts. Tuition seldom covers cost at independent institutions and never at public ones.

3. Quality in American higher education can best be achieved through open competition for students among institutions competing on approximately equal terms.

Federal policies that would discourage private giving to colleges and universities are unsound. To the extent that they succeed, they will increase federal and state tax burdens and diminish educational opportunity. One and a half billion private dollars were given to U.S. colleges and universities in one recent year, half from individuals. The country will not readily abandon the educational services those dollars paid for.

State policies predicated on the concept that a tax dollar winding up in an independent institution leaves state-supported institutions poorer are short-sighted and unwise. A state can save tax dollars and in the long run fund its state-supported colleges and universities with more tax money for the things they need to do and can best do if it makes sensible use, in its educational planning, of the independent colleges and universities within its borders. Costs are reduced by doing things in more effective and efficient ways, not by shifting the immediate burden of paying for them.

Proposals for tuition vouchers such as that advocated by Dr. Silber could save us all money and make for better education in the bargain.

-ALEXANDER HEARD

Chancellor, Vanderbilt University

Must Reading

Would there were some power to force all state legislatures to read President Silber’s “Paying the Bill for College.” We might hear less of the sloppy arguments against state support for independent higher education.

Even so, I imagine the full shock is sometimes lost because Silber’s figures are not always sufficiently explained. Take, for example, the economic value of Boston University to the city, a “$160-million windfall,” to which should be added “bank accounts totaling $23 million” and $35 million in tourist money, etc. Those figures are low, not high. Seldom is the contribution of a college or university to its local community’s economy appreciated fully, and this is so whether the institution is tax-supported or independent. When a state legislature refuses help for some independent institution, and adopts instead a “wasteful policy of imperialist duplication,” leading to the decline or demise of that independent institution, the local taxpayer gets hit doubly: he is charged for the building of an unneeded facility, and he is penalized by the loss of the economic contribution to his community.

MERRIMON CUNINGGIM

Advisor on Program Management, The Ford Foundation

Minority Access

There is a real and critical difference between institutions which are open in their purpose to the public and those which are also fully accountable to the public. The trustees of an independent college are accountable for and to a private corporation. While this is not a bar to the use of public funds, it does limit the inherent ability of independent schools fully to represent and respond to the public interest.

The public interest, as President Silber rightly says, is in access to all who are qualified and can benefit by quality and cost-effective higher education. Massachusetts, despite an economy dependent on advanced technology and a wealth of private educational resources, is comparable to rural southern states in the percentage of its population in higher education. This pattern is not ultimately cost-effective for Massachusetts, and points to the poor performance of both sectors in providing and safeguarding access particularly for minority group members, the economically disadvantaged, and adults. Individual, one-point-in-time comparisons apart, minority enrollment in aggregate is substantially greater in the public sector than in the private sector. The increased provision of access to minority and low-income students by the independent sector over the last decade is partly reflective of the example of the public sector; lacking a public sector, could increased access to the private sector have become a reality? To take one example, the state normal schools, from which Massachusetts’ present state college system has evolved, have had a far more significant role in opening educational opportunities for women than the state’s private women’s colleges.

-PAUL PARKS Secretary of Educational Affairs, Commonwealth of Massachusetts

Best I’ve Read

John Silber’s “Paying the Bill for College” is one of the best pieces I’ve read on reasons to support independent colleges. I like the change of emphasis—redefining “private” to “public.”

-JANET F. UPJOHN Board Member, Nazareth College Kalamazoo, Michigan

Public Sector Triumphant

A generation ago, Joseph Schumpeter described the conquest of the private sector by the public sector, and forecast that it would steadily advance through the rest of the century, as indeed it has. It is visible everywhere, but conspicuously so in higher education, where, increasingly, we see private institutions defeated by public ones. Dr. Silber opposes this process with reason and with fact.

I fear, however, the reason and fact will not have much impact, for the forces at work—so Schumpeter judged, and such has been my own experience—are not at bottom rational, for all that they may be intellectual.

Thus, in the fifteen-year period 1957 — 1972, a reasonably coherent and sizable program of federal aid to higher education was worked out in the executive branch and in Congress. (Federal expenditure for 1975 comes to $8.8 billion, four times the amount for 1965.) As one would expect and hope, this program was designed to benefit a very wide range of interests. The single exception, or almost that, was the private institution of higher education. This was by no means the necessary outcome, but. repeated at critical junctures, it appeared as the outcome the private institutions actually desired. I was much involved in some of these events, and came away rather suspicious of what went on. I don’t think the private institutions were outsmarted. I think they got what, at some crucial level, they wainted. I wrote afterwards: “. . . Ethos has outcomes. In the main, the elite universities are opposed in principle to the social arrangements which make their existence possible.” If I am right, then Dr. Si1ber’s efforts are likely to be in vain. For he will not be supported by those who have the greatest direct interest in doing so. But I should be happy to learn I have been wrong, for we all have an interest in maintaining a mix of public and private in American life.

DANIEL P. MOYNIHAN formerly Professor of Government.

Harvard University, now U.S.

Ambassador to the United Nations

President Silber replies:

Dr. Soutter continues the standard confusions. If the extraordinary costs at the medical school are normal, then there are other new medical schools with comparable costs, I have repeatedly asked the University of Massachusetts administration for the name of such a school. None has been forthcoming.

Even if a sixth of the construction cost was paid bv federal grants, that does not lessen its impact upon the local taxpayer. Surely Dr. Soutter understands that for every federal grant dollar received by Massachusetts. Massachusetts taxpayers pay $1.12 in federal taxes. Their “small share” of the $18 million is in fact 112 percent of it.

There is no trick in charging a $600 tuition as long as the taxpayer is there to supply the needed millions. The independent medical schools could train doctors at zero tuition under a contract system at a cost of perhaps $12,000 to the taxpayer for each student. Full enrollment at Worcester will cost at least five times this amount.

Professor Yarmolinsky finds my statistical treatment of debt service at the medical school casual. In fact, it is a careful analysis of what the medical school actually costs the taxpayer during one vear. If Yarmolinsky disputes these figures, he should provide and document better ones. How would he describe the statistical analysis provided by the University of Massachusetts which simply ignores debt service, a $50 million item in this sear’s budget0 M\ concern is not primarily with institutions, but with enabling students to attend them. 1 stated the priority quite simply: to give meaning to equal opportunity in education. A voucher plan would facilitate this national objective, and I for one am willing to feed the students and let the colleges take care of themselves.

Professor Bowen confuses my voucher plan with other very different proposals. 1 explicitly oppose any raise in the state sector tuition unless compensated for by adequately increased student aid: thus, my proposal has nothing in common with the proposals to which he compares it. Bowen’s concern that heavy dependence on student tuition would result in student dictation of educational programs betrays his provincial association with heavily endowed institutions, where tuition is a relatively less important item of income. At least 1300 of the 1500 independent institutions that educate the vast majority of students in the independent sector have long since learned to preserve their academic integrity despite the fact that most of their income is derived from tuition.

President Silber asks us to point out that the page of statistics and the graph accompanying his article in the May issue were added bv The Atlantic’s editors.

Secretary Parks is properly concerned about the education of women and minorities, but I do not agree with him that the state sector has been more responsive to these needs than the independent. The most recent HEW figures show that the independent sector in Massachusetts educates 8741 minority students who represent 6.4 percent of its total enrollment. The state sector, by contrast, educates only 4306 minority students, or 5.2 percent. In the education of women, the independent sector enrolls 60.010. comprising 43 percent of its total enrollment, compared to 47,418, or 49 percent of the total enrollment educated in state institutions. The independent sector can lead in the education of the poor if the state extends to residents adequate subsidies which may be used either in state or in independent schools.

I do not agree with Mr. Howell that the quality of education available in independent institutions is generally not available in statesupported ones, for each sector embraces a range of quality from mediocrity to excellence. The state sector has been able to compete with the independent sector in quality except in one area, in the provision of small schools. Indeed, I do recognize the inability of the independent universities to provide enough graduates. But I also recognize that the independent sector nearlv doubled in size from 1945 to 1970. It showed no lack of awareness of the need to increase educational opportunity in this nation, and the limit on its expansion is explained primarily by the limitation in its capital resources. Taxpayer-supplied capital was necessary to expand the state sector as one means of meeting the public’s need for higher education, but it is no argument for the continuation of this expansion to the point of redundancy.

I fully support the existence of state-supported higher education. What I have been attacking is the superstition that requires state-supported higher education to be conducted only in institutions built and owned by the state. □