The rising costs of higher education are due to decreased public funding, corporatization of universities, and increased access to student loans. Decreased state and federal support has shifted costs to students, leading universities to pursue profits. Meanwhile, expanding loan programs have allowed tuition to rise rapidly without discouraging enrollment. This has created a student debt bubble as graduates struggle under the weight of loans in a difficult job market. Reformers argue for more public funding of education and mechanisms to relieve student debt, while critics maintain students should pay their own way through competitive private markets.
How to Conduct a Service Gap Analysis for Your Business
Crisis in Higher Ed as a Crisis in Neoliberalism
1. Crisis in Higher Education
as a Crisis in Neoliberalism
GET UP (Grassroots Economic Training for Understanding and Power)
Democratic Socialists of America’s DSA Fund
Left Forum, March 16-18, 2012
5. What is Neo-Liberalism
“Human well being can best be advanced by
liberating individual entrepreneurial freedoms
and skills within an institutional framework
characterized by strong private property
rights, free markets, and free trade. The role of
the state is to guarantee, by force if need be, the
proper functioning of markets. Furthermore, if
markets do not exist … then they must be
created by state action if necessary. But beyond
these tasks the state should not venture.”
David Harvey, A Brief History of Neo-Liberalism
9. Tuition Hikes Have Affected
All Schools
30000
25000
20000
15000
1980
10000 2010
5000
0
Public 4 Year Private 4 Community
University Year College College
13. These Problems were Policy
Decisions
Free Higher Ed is possible in this country we just
need to change our policy regarding education.
This presentation will explain why tuition and
student debt are skyrocketing and what can be
done.
15. Three Main Factors
Decreased support from state and federal funds.
Corporatization of the university.
Access to Student Loans
16. Decline in Federal Spending
In 1986 the Federal Government ended revenue
sharing, which made state governments more
reliant on the state budget
States were instead given grants for specific
budget lines
The federal Government has also shifted much of
their education funding to tax breaks.
The Federal Government spends $22.75 billion on
tax emptions to to make debt more manageable
24. Moral Argument for Public
Control of Higher Education
Society (taxpayers) invest money in institutions of
higher education because it benefits the entire
society.
An educated citizenry leads to an empowered
citizenry, and decisions about how socially
created resources (through taxes, etc.) should be
used should be decided democratically, not by
private institutions seeking private profit.
Higher education should create productive
citizens, not just good workers.
25. Moral Argument
for Privatization of Higher
Education
Creating conditions of instability and competition
(profit motive) is the best way to make institutions
efficient and an efficient institution inherently
benefits society.
Higher education should not be a right, but rather, it
should be something that is bought and sold on the
market and based on the individuals ability to pay.
Institutions should compete for customers (individual
students) rather than benefit all of society.
This argument helps us understand how neoliberal
capitalism has restructured our economy since late
1970s, through deregulation of finance and the
debt collection industry, privatization of public
institutions and corporate welfare, austerity and
budget cuts, and deunionization.
26. Student Debt Cycle
Tuition Increase
Less Federal Aid
Students can
so students
pay higher
need to take
tuition
out loans
Banks Increase
Students have
the amount that
to get Private
students can
Loans
borrow
29. Student Debt Cycle
Tuition Increase
Less Federal Aid
Students can
so students
pay higher
need to take
tuition
out loans
Students have
to get Private
Loans
31. Student Debt Cycle
Tuition Increase
Less Federal Aid
Students can
so students
pay higher
need to take
tuition
out loans
Students have
to get Private
Loans
32.
33. Student Debt Cycle
Tuition Increase
Less Federal Aid
Students can
so students
pay higher
need to take
tuition
out loans
Students have
to get Private
Loans
34. Different Types of Loans:
Guaranteed (private)
The government guarantees loans
originated by private lenders
against losses from default and
pays a fee to lenders. These loans
are 5 times more expensive for
federal budget than Direct Loan
programs.
35. Different Types of Loans:
Direct (public)
Direct Loans - the government
directly lends to qualifying
students without a middleman.
38. What is a Bubble?
A bubble occurs when prices for an object are
much higher than the intrinsic value of the object
The Student Loan Bubble comes from three main
causes:
Tuition rising faster than wages
Inability to discharge student loans
Unemployment levels for youth very high
40. Moral Argument for Reforms
Society (taxpayers) invest money in students
because it improves the entire society.
This argument says that in an economy where 4
people apply for every 1 job opening, students
are graduating only to compete with more
experienced workers, so we should provide
exceptions for struggling borrowers.
Working together and investing socially created
resources (taxes) to provide equal opportunities
for all is valued.
41. Moral Argument
Against Reforms
Students must find their own way to pay for higher
education, and private institutions will lend the
money, according to certain rules. If students break those
rules, it is their own fault and they must pay the price.
This argument ignores how neoliberal capitalism has
restructured our economy since late 1970s, through
deregulation of finance and the collection
industry, privatization of public institutions and corporate
welfare, austerity and budget cuts, and de-unionization.
These neo-liberal policies lower real family wages and
make private family financing of college much more
difficult.
Creating conditions of individual instability and
competition (profit motive) is valued by
conservative, though these policies cause great
individuals and social harm.
43. Allow for Credit Release
Valves
One such option is the Student Loan Forgiveness
Act of 2012.
Students would be forgiven loans after 10 years of
paying 10% of discretionary income.
Discretionary income, in this case, appears to be
defined as any annual income exceeding 150
percent of the poverty line for an individual or family.
If students went into public service their loans would
be forgiven after 5 years
Public loans would be capped at 3.4%
44. Absolve Student Debt
Invest in future
Invigorate the economy
Then attack the root of the root of the problem:
inadequate regulation of the finance industry
and inadequate public funding of higher
education due to tax cuts for corporations and
the rich and excessive and wasteful military
spending.
45. Free Higher Education
Most European countries have highly subsidized
higher education.
Cost of free higher education in the U.S. would
be $15-80 billion per year.
The Bush Tax cuts cost the US $1.7 trillion over a
decade or $170 billion every year.
The crisis in affordability and accessibility of
higher education has clear political causes.
Thus, we must build a mass movement for
affordable higher education that forces
politicians to change how we fund higher
education.
46. We Can Pay For Our
Education
It would cost us .4% - 2.2% of the federal budget
to fully fund public Higher Education.
That is either 2.8% - 11% of our military budget.
And it would just cost us 8.8% - 47% of one year of
the Bush Tax Cut
47. Thank You
Young Democratic Socialists
www.ydsusa.org
Democratic Socialists of America
www.dsausa.org
The presentation can be found at:
http://www.theactivist.org/ydsusa/sites/default/fil
es/powerpoint/Social%20Market%20Alternatives.
pptx
Notas del editor
Introduce yourself and the project first: Hi my name is _______, I’m with the Young Democratic Socialist chapter on _(your campus)__. I want to thank everyone for coming out. Today we’re going to be talking about how the crisis in Higher Education is a reflection of Neo-Liberalism and what can we do to change the system and win free Higher Education. This is part of the Democratic Socialists of America’s GET-UP project. That stands for Grass Roots Training for Understanding Power. If you want to know about that project, talk to me after the teach –in.Hand out the outline for the teach-inDo a round of introductions (Name, year in school, why did they attend)
Ask the group about who has been affected by rising costs:Who here has had tuition more than they originally expectedWho has had to take out loans to pay for school?Who has had to cut back on classes due to rising tuitionWho has had to leave school at some point/know someone who left schools
Many people will have just said they suffer from high education costs, so ask them why they went to school in the first place.So ask people why we need an education in the first place.When you get someone to say “For a good job” switch to the next slide
As you can see there is a huge earnings gap between people who go to college and the people that don’t. This means that College is required to earn a decent living.Push people to name other reasons for going to school. You want someone to talk about how education is inherently useful and how it creates better citizensUse this to lay out quick definition of socialismWe want more democracyWe believe everyone should have the ability for self-realizationWe believe that oppression is multi-faceted and goes beyond class and identity oppression
Ask how many people have heard of Neo-Liberalism beforeLay out the definitionExplain that the problems we are having with Education are caused by Neo-Liberalism but not some things that happen are desired results and some things are accidents.
College tuition is rising much faster than other expenses. It is taking up a larger % of people’s income. Stress that this is from 1982 to 2007
Use this to show the trend has continued. The previous slide showed the % up to 2008, this shows it up to 2011.The graph compares costs between 1985 and 2011 in constant 1985 dollars. The CPI rose 115% in 16 years, while a college education rose almost 500%.
1.Average tuition at public 4-year colleges was $2,100 in 1982, and jumped to $7,600 in the 2010.2.Average tuition at private 4-year colleges nearly tripled in a generation, increasing from $9,500 in the 1980 academic year to $27,300 in 2010.3. Average tuition at community college also rose steeply, more than doubling from just over $1,000 in the 1980 academic year to $2,710 in 2010.4. All dollar amounts are constant 2010 dollars5. As State schools increased tuition it allowed private universities to raise tuitionEnrollment in 4-year colleges amongst academically qualified, low-income students dropped from 54% in 1992 to 40% 2004.
Student loan debt is now at about $900 billion. This exceeds revolving household debt (about 98% of credit card debt).
The amount of student debt in this country has been growing dramatically, at this point it has surpassed credit card debt, and today on April 25th student debt will hit $1 trillion!
Of the class of 2005 borrowers who began repayments the year they graduated, one analysis found 25% became delinquent at some point and 15% defaulted. The Chronicle of Higher Education puts the default rate on government loans at 20%.In 2009, 8.8% of all student loans were in default after 2 years, compared to 6.7% in 2007. That was a 31 percent increase in the default rate in just 2 years.Students choose professions based on finances rather than interests.Defaulting loans is extremely profitable for lenders. For example, Sallie Mae saw an over 200% increase in their fee income during the first half of the 2000s. In a 2005 report, they claimed that their fee collection business accounted for 32% of their core earnings.A shift towards 529 savings plans (state-level tax deductible college savings plans) as state and federal investment decreases. These plans benefit only the relatively well-off families, who benefit from an increase in tax deductions.
First we need to understand why tuition is rising.
We’re going to walk through how we got to this point. Many of the reasons behind this issue are related to Neo-Liberalism
(tax break stat) http://rortybomb.wordpress.com/2011/12/20/could-dismantling-the-submerged-state-surrounding-student-debt-pay-for-free-colleges/)Shifting federal funds towards tax breaks is a Neo-Liberal strategy to make us rethink education. When the government paid for education it was because society viewed Higher Education as a public good. As we’ll see in the next slide the Neo-Liberal agenda has shifted funding from state funding to more individual sources of funding.
The states in blue are states that have cut funding to education. In response to dramatically decreased federal aid to states, funding of higher education dropped from 7.2% of state expenditures in 1977 to 5.3% in 1997, a 27% drop, as states de-prioritized education.The share of public university budgets provided by the states have dropped from 50% in 1979 to 35% in 2000, and in the wake of a weak economy, have dropped even further.
The fact that funding comes from the state level is problematic:At times when tuition increases would affect students the most, states are more likely to cut funding.This is because states are almost all constitutionally required to balance their budgets each year.So during recession periods, states take in less revenue and usually cut the budget rather than raise taxes on the wealthy or corporations.
This has forced universities to rely on tuition to fill that gap.In 1985 23% of funding for higher education came from tuition, while in 2010 it climbed to 40%.States were decreasing the commitment to higher education since the 80’s and during recessionary periods it allowed states to increase tuition. Neo-Liberalism wants to stop the government from delivering services because they believe that government services introduce market irregularities. According to the Neo-Liberal model goods and services would be delivered best by an unhampered market.
Universities can be places where knowledge is created socially (through the effort of many people) while a new generation of active citizens is developed.Increasingly, however, they have been corporatized and harnessed for private gain, through:The change in faculty from full-time tenure track professors to part-time, low-paid and insecure faculty has prompted concerns about academic freedomMore money being spent on administration and advertisingAdministration costs have also been rising: Administrators are now paid like corporate managers and if current trends continue, the Department of Education estimates that by 2014 there will be more administrators than instructors at American four-year nonprofit colleges. Research relying more on corporate funding as federal and state research support is cut
Allowed universities to patent publicly funded research and sell those patents to the private sector.This pushes the university to interact more with the private sector. As the federal government cut public funding for research – through cuts to the National Science Foundation and National Institute of Health, universities were forced to search for new private sources of funding, and with money, comes influence. Again this changed the conversation we have around education. Neo-Liberal advocates said that the private market could provide funding for research as long as it was producing profits for the industry. Higher education and research were viewed a commercial decision.
As schools rely more on administrators and corporate funding, more decisions are taken out of the hands of faculty and students.Stripping collective bargaining (union) rights from faculty.Decreasing the number of tenure track positions.Favoring some departments over others (economics over history, for example).Removing important academic programs, such as ethnic and gender studies departments, that students fought for and won in recent decades.
The final logical conclusion for Neo-Liberalism is to take the state universities totally out of the public sector and turn them into private businesses. Neo-Liberal critics are using the same language they use to promote charter schools to promote privatizing public universities. They claim that privatizing the university will allow the state to save money, keep tuition down, and make the universities focus on job preparation.States across the country are looking to spin-off their public schools into private colleges and universities.Privatization pushes schools to focus more on efficiency rather than knowledge-driven academic culture, since private institutions exist to make a profit whereas public ones exist to benefit society.There will likely be increasing barriers for low income student and students of color at these institutions.There will likely be a further split between schools that provide the traditional liberal arts degree and ones that provide certification for less prestigious jobs.
Access to student debt is one of the leading factors of rising costs.As we’ve seen before tuition is rising due to declining state funds. Because wages haven’t risen at the same rate people need financial aid to pay for college.Switch the the Next Slide
Federal aid to students come in two forms:Grants are direct payments that students don’t have to pay back.Loans are money that an institution lets a student borrow, but the student then owes it back later, with interest.There are direct government loans and private lender loans, where there is a middleman between the student and the government.Student debt is rising dramatically – at $900 billion, it recently surpassed credit card debt a the largest form of debt.
Even if you receive aid the amount that it covers has been declining, forcing students to find other ways to pay for college.
Access to student debt is one of the leading factors of rising costs.As Federal grant aid has declined students are forced to take out loans to pay for school. Switch the the Next Slide
From 1997 to 2011 we see
Because Students need more money than what is provided by federal loans, students are forced to take out more money, often for-profit loans.Switch the the Next Slide
Because students can pay more for college schools are now able to raise tuition. Which leads us back to the original point.
Many groups are predicting that student loans will be the next bubble to burst, much like housing was the last, unless steps are taken by the federal government.The bubble is growing because the degrees people earn are not worth the amount that they are taking on in loans.
Some very simple steps would be:allow students to access bankruptcyreduce the statute of limitations for borrowingimprove oversight of private collection agencies
