What We Spend on, and Get from, Higher Education

November 1, 2011

It is commonly asserted, especially by people within higher education, that the American Ivory Tower is strapped for cash and tightfisted taxpayers are to blame.  Taxpayer support for postsecondary education has long been in decline, this narrative goes, and has forced schools to continually raise tuition to make up for the losses, says Neal McCluskey, associate director of the Cato Institute's Center for Educational Freedom.

However, tallying taxpayer-backed expenditures on higher education over the last quarter century, and separately tallying 15 years of taxpayer burdens after accounting for student loans being paid back, reveals that this narrative is inaccurate.  No matter how you slice it, the burden of funding the Ivory Tower has grown ever heavier on the backs of taxpaying citizens.  Whether one examines taxpayer dollars in total, per enrollee, per degree or per tax-paying citizen, real spending has gone up.

Unfortunately, financial costs are only part of the story.

  • While the evidence is not conclusive, it appears that the additional spending and the additional students and degrees it has helped to fund do not ultimately constitute a net societal gain.
  • Instead, all the coerced, third party support has likely produced several damaging, unintended consequences: credential inflation, sky-high noncompletion rates, and rampant tuition inflation.

In other words, the money taken from taxpayers, in total and on an individual basis, to "invest" in higher education has been on the rise, and it appears to be hurting both taxpayers individually and society as a whole.  We have taken money from people who would have used it more efficiently than has the system to which it was given.

Source: Neal McCluskey, "How Much Ivory Does This Tower Need?  What We Spend on, and Get from, Higher Education," Cato Institute, October 27, 2011.

For text:

http://www.cato.org/pub_display.php?pub_id=13801

 

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