Pretty much the first thing I wrote on TPM was a critique of FAFSA, the Free Application for Federal Student Aid, available here. In summary, I noted the FAFSA equation is worked out backwards (based on how much money is available), and not "forwards" (based on the ability of families to pay - which is how FAFSA advertises itself).
But this post isn't about FAFSA - it's about the more fundamental question of how we pay for our college education. I have experience of the university system both in the US and the UK, and let me state right here that neither one is effective in the least. While many will be familiar with the flaws of the systems, let me spell it out in black and white:
In the United States, families are paying far too much for college. They can't afford it. Students are taking on loans that they have no chance of paying off, they're torn between the "unpaid internship" - which is designed to give them better employment prospects in the long run, and the "summer job" - which is designed to pay the bills for next week's grocery shopping. The debt runs, in some cases, into the hundreds of thousands. The hardship on the average family is unimaginable, and all the while our "elite" institutions - the ivy league, the private university club - are dominated, basically, by the very wealthy.
These problems I'll assume are familiar to most readers. Let me take a little more time to elaborate on the problems of the British system.
Over in the UK, students seemingly have a far more attractive option: a flat rate of £3000 ($6000) per year for any educational institution (there is no such thing as a "private" university). The education is government-subsidized, and the pressure on families is far lower. BUT (and this is an astonishingly large but) - Universities are under-funded. And I don't mean this in the way that many Americans may view their universities as "underfunded". I mean insufficient housing, low security, high crime, buildings falling down, educational standards dropping, and falling staff salaries - right from the very bottom to the very top. In the UK, even the "elite" institutions are closing departments, laying off staff, and unable to provide accommodation for roughly 75% of their students. Meanwhile, the US has around 70-75% of high school graduates going on to college, compared with only 40% in the UK.
The reason for this underfunding is simple. Just because the average family is paying £3,000 for an education, doesn't mean that the actual *cost* of that education is any different than it is in the United States. An undergraduate education in the US can cost anywhere up to $50,000 per year, and the same is true in the UK. If you're doing an expensive course, like, say, Medicine (which is an undergraduate option in the UK), at a high quality institution like, say, Imperial London, then there's a high chance that your degree actually does cost £25,000. So who is paying the outstanding £22,000? In theory, the Government pays. But as the budget has gotten tighter, and as the number of students has gone up - this money simply has not been available. It is an archaic form of paying for education, which comes from the 1920s (when University was totally free for everyone), based on the concept that a very, very small percentage of the population would get a college education.
Based on a US-oriented mindset, the assumption for many will be that if the Government isn't paying the shortfall, then the universities will have to subsidize it out of their own endowment. Let me be clear: the word "endowment" is a punch-line in the UK. By way of a fairly simplistic comparison, Oxford has an endowment of $6bn. Harvard has an endowment of $36bn. The majority of Harvard's endowment is liquid (or at least easily accessible), while Oxford has an endowment locked up in land. The difference is vast. Suffice it to say that, when all is worked out, and when the shortfall in payments is taken into account, and when the government doesn't pay any more... Universities in the UK are grossly underfunded.
The most significant manifestation of this underfunding is accommodation. All across the country, universities simply do not posses the requisite number of dorms to house all of their students. In the majority of cases, they will be able to offer housing to Freshmen, and very occasionally they will have spare rooms for around 10% of the Senior year. This of course means that the average student must spend two or three years renting privately. The student housing market in the UK is the equivalent to the student loans market in the US: it is predatory, competitive, and vastly overpriced, and comes with the bonus of badly maintained buildings with limited flexibility.
The second problem with underfunding is security. Security on campus universities in the US is usually very good - they are secluded and for the most part isolated from crime. And for those universities which are located in cities, there is in most cases a strong presence. Take a look at my avatar. I'm perfectly aware that Columbia has a fleet of SUVs and Ford Crown Victorias patrolling 24/7/365 - and memory tells me the same is true of Harvard, Georgetown, AU, GWU, JH, etc. I've seen similar (albeit less beefy) contingents around other NYC schools, and always - always a presence on the doors of buildings.
British Universities have no security. Zero. The result is very high crime rates around student areas, which (see above) tend to be run-down, bad locks on doors, etc. The number of rapes, assaults, and burglary cases is astonishing.
This underfunding manifests itself in a variety of other ways, as mentioned: department closures, staff wages falling, limited research options - right down to the minutiae of limited library opening hours.
But for now, let me elaborate what I feel is the solution.
The most important thing is to keep the progressive pay scale that exists in the American system. Socializing and creating a flat-rate simply doesn't work, and leads precisely to the shortfall that we see in the UK. If there's someone with an annual salary of £2.5m, I'm damned certain I want them paying the full price of their kids' education, and not draining the limited Government resources from all the rest of us. This would help make up much of the shortfall in funding. Meanwhile, for the ordinary person, the progressive pay scale must be truly progressive. It must calculate an ability to pay realistically, and not backwards, as my previous post suggested was the case. It must take into account mortgages and healthcare bills and second or third children, and then it must give us generous leeway to the tune of several thousand dollars.
British Universities need to learn to curb their addiction to government money, too. For too long, the "big five" have had a stranglehold over Downing Street, able to extort the final pennies out of a cash-strapped treasury, to the detriment of their own students. Universities need to be given strong incentive to raise their own money through endowment (I would propose a sliding mandate, in which universities must raise £1 for every £2 of government spending, moving to £1 raised for every £1 spent, and eventually (in some cases) becoming £2 raised for every £1 spent)
This much the UK has to learn from the US framework. Meanwhile, the US should adopt, like the UK, an entirely centralized student loans system based on "pay while you earn", not "pay while you learn". Under this system, students can opt to defer all (or part) payment of their tuition until they are earning. On top of this "tuition fees loan", there is the "maintenance loan", which effectively pays for living costs (if we ignore the minor problem of overpriced, high-demand, bad-quality accommodation). For those who decide to live at home, and save money, this maintenance loan can be a useful tool in paying your way through an unpaid internship, which would otherwise be financially impossible, given the time-opportunity cost of sacrificing the potential wages from a paid summer job. Both of these loans accrue interest AT the rate of inflation. After graduation, there is a 12-month grace period, following which the rate increases, but remains TIED to the rate of inflation. None of these loans need to be paid off until the student is earning a minimum of £16,000 per year ($32,000). Following this, the amount they need to pay is dependent on their salary. If they reach retirement age without ever having earned more than this base amount, then all debt is automatically written off.
Let me conclude by offering some reasons for writing this. I am too often faced with a yearning by Americans for "socialized" and "cheap" education, and the dreamy aspirations by Brits for "wealthy" universities. I write to foster an appreciation on both sides of the pond that the grass isn't greener - it just grows in different directions. Both countries are facing a crisis in their education systems right now, and I believe that through an amelioration of the two systems, a better deal can be reached for all.
If you enjoyed reading with this, or have an opinion of any sort, then I'd appreciate a "recommend" click: I'd like to get feedback from as many people as possible. Thanks!
