State must not give up its role in affordable education”

Published in The News Tribune, May 26, 2011

For the next few years at least, the Legislature’s power to set tuition at the state’s higher education institutions has come to an end.  By ceding this authority, the Legislature recognized that it couldn’t drastically cut higher education’s support on the one hand, while also prohibiting institutions from turning to students for the difference.

Now that this is resolved, lawmakers should turn to policies re-establishing an affordable system of higher education in Washington State. 

This sounds counterintuitive — you let tuition skyrocket, and now you turn to making college affordable?  But states across the nation are experimenting with funding rules designed to squeeze more bang-for-the-buck out of their higher education dollars.

The jury is still out on this new wave of “performance-based” funding schemes.  Personally, I’m skeptical – not because higher education is already efficient (it isn’t).   My skepticism stems from the difficulty of using one set of bureaucratic rules to bring change to another bureaucratic setting.  Think of the problems No Child Left Behind brought us.

So what to do?  Let’s start with what not to do:   Do not guarantee residents that tuition will only cost you such-and-such amount. Too many states, including Washington, have gotten sucked into such a policy. Washington’s Guaranteed Education Tuition (GET) program was established with this in mind.  By paying future tuition today, GET enrollees are protected from tuition inflation.

But think about it.  After next year, UW’s tuition will have grown 50 percent over three years.   As a result, GET enrollees will have made a 50 percent return on their investment over this period.  Meanwhile, non-GET citizens without the same State guarantee face escalating tuition.   Essentially, we will wind up with some citizens paying lower tuition that they locked in earlier, and others paying on the “spot” significantly more in tuition.  This is unfair  — wealthier citizens are far more likely to lock in the guaranteed tuition rates; it’s also risky for the state.  This risk is obvious now:  The state pays out GET enrollees’ tuition expenses at the same time that GET enrollees’ payments are not earning the state that much.  GET and similar programs around the nation are already looking to taxpayers and future enrollees to bail them out.

So what can states do?  Let’s recognize that the idea behind GET was a good one:  Uncertainty around tuition levels means parents and students have a hard time planning for college.  Couple this with uncertainty in the job market, and you have to wonder if college even makes sense for some.  When it comes to college decisions, lower income citizens are faced with an especially risky decision.

If states are increasingly unable to do much about the cost of college, they can do something about this risk.  They can guarantee their citizens that the burden of paying back college expenses will only last a certain number of years, and will not exceed a certain share of post-college earnings.  Such a guarantee (some national governments, including our own, are moving in this direction) effectively shifts the risk of high college expenses from citizens to the state.  While GET does this in a way that benefits wealthier citizens, this alternative plan would benefit citizens who graduate into a bad labor market or aspire to (or wind up in) a lower-paying career.

As with GET, such a scheme shifts risk to state governments.  While state governments are better placed than are individual citizens to take on this risk, it could backfire during prolonged recessions.   For this reason, making college affordable by guaranteeing that the runaway costs of college doesn’t bankrupt you after the fact would take a more complicated state-federal partnership than I’ve outlined here.

But when money is short, this is the way to go.  First, it provides a guarantee to those most in need of such a guarantee.  Second it puts higher education in the spotlight – not for what it costs going in, but for what happens to students in the job market once they leave.