The tragedy of US higher education

By Felix Salmon
May 9, 2013

The tragedy of Cooper Union is endemic to most American higher education, outside a few community colleges; Cooper is just the special case where the blind rush to some kind of global greatness directly and explicitly violates the institution’s founding mission. Now a fantastic report by Stephen Burd shows that it’s not just Cooper which is becoming more expensive for precisely the students who can least afford it. Rather, that’s happening across the US: aid which should be going to the poorest students is in many cases going to some of the richest.

The title of the report is “Undermining Pell”. The Pell in question is Claiborne Pell, the Rhode Island senator who created the first grant designed to remove the financial barriers that prevent low-income students from enrolling in and completing college. The Pell Grant system has been growing fast, and reached $33 billion in the 2010-11 academic year, thanks in large part to the effect of the recession on poorer families’ incomes, and the way that high youth unemployment has encouraged American kids to go to college.

But the money is not, in truth, making college more affordable. Quite the opposite, writes Burd:

There is compelling evidence to suggest that many schools are engaged in an elaborate shell game: using Pell Grants to supplant institutional aid they would have provided to financially needy students otherwise, and then shifting these funds to help recruit wealthier students. This is one reason why even after historic increases in Pell Grant funding, the college-going gap between low-income students and their wealthier counterparts remains as wide as ever. Low-income students are not receiving the full benefits intended.

The big picture here is that colleges are spending as much money as they can on “merit” scholarships, rather than “need” scholarships. The former have two big advantages over the latter, as far as colleges are concerned. Firstly, by attracting the best students, rather than the merely impecunious, they improve the quality of the student body, at least in theory. Secondly, and more importantly, because they are smaller, they allow the university to make much more money. As Burd puts it: “it’s more profitable for schools to provide four scholarships of $5,000 each to induce affluent students who will be able to pay the balance than it is to provide a single $20,000 grant to one low-income student.”

The result, if you’re a poor student, looks something like this:

Go play with the full interactive chart, it’s worth it. But a glance tells you a lot. Along the y-axis is the proportion of Pell Grant recipients in the student body; at the top it reaches 50%, while the color cutoff, between orange/blue and red/green, comes at 15%. Along the x-axis is the amount of money that a poor student, coming from a family with a household income of less than $30,000, would need to pay to attend the college in question. It goes all the way up to $48,000; the color cutoff, between orange/red and blue/green, comes at $10,000. And yes, that’s per year.

What you can see, quite clearly, is that the vast majority of colleges sit to the right of that cut-off: it costs their poorest students more than $10,000 a year to attend, even after getting a Pell Grant. You can also see that a lot of poor students are paying a lot of money for their education: some colleges have 30% or 40% or more of their students collecting Pell Grants, and still charge those students through the nose.

Pell Grants are not aimed at the middle classes: you really can’t get one if you come from a family earning more than $50,000 a year, and most Pell Grant money goes to families earning less than $20,000 a year. And it turns out that the trendy tuition structure du jour, the one known as “high tuition, high aid”, is particularly and surprisingly ill-suited to such students.

In theory, the structure should work well. Rather than charge every student the same amount, have a high rack rate, paid by the richest students, and then use the proceeds to put in place a generous scholarship system which will help support the poorest students.

In practice, however, that doesn’t happen. The scholarships go towards “merit aid”, which is often, dismayingly enough, a polite way of saying that the college is helping to pay for wealthy kids to attend, even if they’re not particularly smart. Some 20% of students with GPAs below 2.0, for instance, receive merit aid. And at the same time, the “need aid” is carefully calibrated so that poor kids won’t take the colleges up on their offers:

In its latest survey of college admissions directors, Inside Higher Ed found that more than one-third of public colleges and nearly two-thirds of private colleges engage in “gapping” — providing lower-income students with aid packages that don’t come close to meeting their financial need. In the parlance of enrollment management, this is often called “admit-deny,” in which schools deliberately underfund financially needy students in order to discourage them from enrolling.

“Admit-deny is when you give someone a financial-aid package that is so rotten that you hope they get the message, ‘Don’t come,’” Mark Heffron, a senior vice-president at the enrollment management firm Noel-Levitz, told The Atlantic Monthly back in 2005. “They don’t always get the message.”

In other words, “high tuition, high aid” generally has the emphasis on the former, rather than the latter. There are exceptions, foremost among them Amherst College, but the story running through Burd’s report like a thread is the story of colleges which try to become more “competitive” by doing everything they can to attract the particular students they want, who are rarely the poorest students.

What is the competition? Narrowly, it’s the competition to rise up the US News rankings. But more broadly, it’s the competition to enter the rarefied world of international luxury goods. Education, these days, is no longer a right: instead, it’s increasingly a way for the children of the rich to be ridiculously pampered as they float their way to lives of “international leadership”. Just in the past few days we’ve seen Jenny Anderson’s description of the Avenues school for the NYT magazine, and Lisa Miller’s revelation of the cosseted lives led by students at NYU Abu Dhabi. Such places might pay a minimum of lip service to the principle of diversity, but it’s clear they’re all about the global plutocracy.

This trend seems to have been missed in Washington, where graduates of elite institutions are prone to taking what those institutions say at face value. Even when, as Tori Haring-Smith, president of Washington & Jefferson College, puts it, colleges have been engaged in “increasingly progressive rhetoric and increasingly regressive actions.” From a societal perspective it’s obvious that the most effective thing we can do to improve our workforce is to get more poor kids into college. But the prices and obstacles facing those poor kids are only getting worse.

This is not a problem which can be solved simply by throwing more money at the Pell Grant program: as Burd shows, that money might well only end up getting effectively redirected elsewhere. But we do need to do something. In our information-age economy, America can ill afford to let the bottom half of the population be in large part excluded from tertiary education. That’s the outcome we’re seeing right now, and that’s the outcome which desperately needs to change.


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Whether we like it or not more meritorious (i. e. smarter) students are more likely to come from affluent families (their parents better educated and better adapted to economic realities)than poor families.

We should understand (and appreciate) that the college system — especially the more prestigious colleges — practice very effective price discrimination. Affluent students are usually charged full boat (or even more as “legacy students” — their parents made major financial donations to the school) while poorer but promising students get financial assistance.

Felix should understand the system before he becomes too critical.

Posted by Ed62 | Report as abusive

I wonder whether the most effective way for an advocacy group to change this wouldn’t be to lobby US News to move toward a more “value added” ranking system, i.e. rather than rank the schools according to how their matriculants would do regardless of what school they attended, rank a school more highly if it takes students that other schools have given up on and gets that kid a decent education.

Posted by dWj | Report as abusive

The problem in US higher ed is its exhorbitant cost. The real cost per diploma is far higher today than it was fifty or even forty years ago. University expenses are unmanaged. There are excellent small private colleges in America today which provide a first-rate education for a fraction of the cost of the big names. This is because (1) they don’t have bloated graduate programs; (2) they don’t have bloated sports programs; and (3) their curricula are not filled with fashionable ephemera. I recommend comparing the curriculum of a prestige college today with its curriculum in 1963. You will discover that in 1963 it was more rigorous, more demanding and much shorter. Who pays the price for college extravagance? The white middle class, who now must struggle to get their kids into Eastern State, if they are lucky. There are no white middle class kids at the top schools anymore.

Posted by nixonfan | Report as abusive

Other than “higher education” there isn’t an industry in the country that could have raised their prices 8%-10% a year for the past ten years. The administrator-to-student ratio is increasing while the quality of the (so-called) education is diminished.

The universities, including those publicly funded, are run by and for the administrators and faculty. That’s why you see what historically were four year degree programs migrating to 9- and 10 semester programs. We have degree programs, most often “studies”, that now require a separate department, with a clique of their own department heads and (more) administrators. Investments in student services and facilities are strictly designed to keep more butts in more seats at a higher annual cost.

Minors in the liberal arts college of the 1960′s-70′s are now “majors” with few skills transferable into the working world–other than academic environments of the same universities. We have college graduates stocking shelves because that’s all their degree is worth, and no professor would compromise his self-worth by telling students their degree was not marketable.

It’s only beginning to surface in the various law schools, where JD’s are now learning their dream job, let alone any law job, is not available. Most JD’s that get hired earn around $50,000, so there is little ability to pay off a $70,000 law school loan, let alone the undergraduate loan of $20,000.

When one considers that less than 50% of incoming freshman earn their degree, we need to start rethinking what higher education is all about, and who is admitted in the first place–beyond what is best for the administrators and faculty.

Consolidation is the result when an industry is over-supplied and under-performing. Higher education is not immune to economics.

Posted by COindependent | Report as abusive

Most so-called “merit” money is simply a transfer of money from parents who pay full tuition to the parents of students who pay full tuition minus $5,000 – $10,000 dollars. This is not social progress, it is a discount to some parents subsidized by other parents. Colleges disguise this by saying that even full tuition does not cover the full cost of a student’s education, which happens to be total BS. If what the colleges say were true, how could so many fine private schools that have relatively small endowments (for example, Sara Lawrence and Skidmore) manage to survive, even though they charge roughly the same tuition as Yale, Harvard, Stanford, which have huge endowments? Clearly, full tuition is enough not only to cover the costs of a full-pay student, but is sufficiently excessive to allow schools (even poorly endowed schools) to transfer “merit” payments to the children of other parents. Full price parents are not being subsidized, and what’s worse, their outright gifts to the students of fellow parents is received without even so much as thank you.

Posted by maynardGkeynes | Report as abusive

Public education K-12 (Public HS ranked #88 nationally in somebody’s recent survey), plus a BS (Annapolis)and MS all on the taxpayers. Hands down the best college professors I had were UK military exchange officers (RN and RAF). I think they actually specialize and don’t necessarily go back to their respective combat branches After that recent Masters and Doctoral grads who could actually teach. It doesn’t matter how much you know as a professional educator if you can’t teach. Tenured civilian professors were among the worst. I actually considered it an advantage my US military professors (all recent MS or PhD) knew they were going back to the fleet after a couple of years and were not under pressure to research/publish.

Best advice ever from a professor: You aren’t going to remember any of this (particular engineering course) in 5 years. But, know what you know, know what you don’t know (sorry, sounds a little bit Dick Cheney) and know how to find out what you don’t know.

Posted by Bryan92104 | Report as abusive

There are clearly people who place a premium on a brand name Ivy League education with words like Princeton, Harvard, or Yale next to the B.S. or B.A. or grad degree. I know if you are Law, Med, or MBA that opens doors. I have a few HS few friends who maxed out their SATs, awesome for them (Mr. Marshall). Mine was fine for Annapolis, where, BTW, they claimed to have a secondary emphasis on athletics and military stuff but if you were paying attention you gave that some of your time but focused on academics.

Unfortunately my experience has been that higher levels of education (in professors) don’t usually come with instruction on being a professional educator. Which is what they are supposed to be there to do. I don’t care how much you know or what papers you have had published if you can’t teach. K-12, BS and MS all on the taxpayers and the absolute best college professors and technical military instructors (radar systems, etc.) I ever had were UK military officers on exchange tours.

Posted by Bryan92104 | Report as abusive

There’s another tragedy going on in Education that people are ignoring. The fact that there are corrupt Imposters running the College and padding their own pockets. For instance the new appointment for LSU President F. King Alexander. Lawsuits are filed about the secrecy of his hiring. It had to be in secret because his CV is full of lies. We’ve vetted his CV in an interactive “Living Novel” to respond to the events that are unfolding now in Louisiana. Come read and be the judge.

Posted by Dcohenla | Report as abusive

There’s another tragedy going on in Education that people are ignoring. The fact that there are corrupt Imposters running the College and padding their own pockets. For instance the new appointment for LSU President F. King Alexander. Lawsuits are filed about the secrecy of his hiring. It had to be in secret because his CV is full of lies. We’ve vetted his CV in an interactive “Living Novel” to respond to the events that are unfolding now in Louisiana. Come read and be the judge.

Posted by Dcohenla | Report as abusive

Yet another tragedy in education is that so many graduates cannot find jobs. Perhaps the finger needs to be pointed directly at the education community for not doing a better job of preparing students for USEFUL careers.
By taking thousands of dollars and causing huge student debts that can’t be paid back the education community (colleges, universities) is doing nothing less than ripping off youngsters. They do pay their presidents huge sums for this failure, whether public or private schools.
Try to get a decent job today after a costly graduation with a bachelor’s degree in political science, psychology, history, biology, social sciences, etc. Try this one instead: Promote getting a degree in one of the energy fields!!! Why is that not promoted over all the other silly degrees. It’s a failure of the educational community.

Posted by Margaretville | Report as abusive

@Margaretville, who do you believe should make career decisions? Students, parents, or professors? As long as you allow individuals the freedom of choice, many will make poor decisions. Do you propose to take away that freedom?!?

Nobody is under any illusion that a BS in political science is the equivalent of a BS in engineering, yet students prefer political science because it is easier. Maybe they believe they are sufficiently special that they will find employment without any marketable skills? Maybe they lack perspective and don’t think beyond college? But it is their choice — faced with the alternative of investing another 20 hours a week in their studies and switching majors, most will switch majors.

Blame yourself if you chose a meaningless degree in a field saturated with unemployed graduates. Don’t blame the professors who taught you what you asked for.

As a high school teacher, I see some students who imagine a future for themselves in nursing, physical therapy, or other health fields. They have the talent and the interest to be good — but in some cases can’t muster the discipline necessary to complete 15 minutes of Algebra II homework regularly, and earn C grades as a result. These students need to double or triple their effort if they are to succeed in their chosen career. But my bet is that most of them will end up in something else.

Posted by TFF | Report as abusive

If you want an online-only education, you can already get a good one for free. Plenty of courses online, and it doesn’t take a government initiative.

As for those numbers, $5B is barely enough to run Harvard for ONE year (their annual budget is $3.7B), let alone run 100 universities for five years. It is a drop in the bucket. You can’t hire qualified people to grade 40 final exams for $250/student, let alone do the rest of what you propose on that budget.

Do your homework, then get back to us with a serious proposal. And spend a little more time elaborating on exactly what your online-only courses would look like? They absolutely would NOT be on par with Caltech’s usual standards, as there simply are not 21 million students in the US who are prepared for that level of work. Nor have you provided any budget for tutors, TAs, graders, or any other personal contact. For $5B you’ll get a series of pre-recorded videos and a computer-graded multiple choice exam.

Thank you very much, but I’ll pay $200k if that is what it costs to offer my kids a real education. They can have that, and watch the free lectures as well.

Posted by TFF | Report as abusive