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Published in the Fall 2006 issue of The Montana Professor

HIGHER EDUCATION & THE SOCIAL COMPACT

William E. Kirwan
Chancellor and Chief Executive Officer
University System of Maryland
bkirwan@usmd.edu

One of the defining features of our nation is the development and evolution of an implied social compact that places a responsibility on each generation to provide for the education of the next generation. This compact first surfaced in the 1850s as states began developing compulsory free education for youth into their teenage years. A critical expansion in this inter-generational compact came with the passage of the Morrill Land-Grant College Act of 1862. This visionary legislation, championed by Vermont congressman Justin Smith Morrill and signed into law by President Abraham Lincoln, created the land-grant university system. By establishing at least one college in every state with the expressed purpose of promoting "... the liberal and practical education of the industrial classes on the several pursuits and professions in life," the Morrill Act signaled our nation's intent to make higher education access available to the ‘working classes', not just the wealthy. In 1890, the Morrill Act was expanded to provide for additional land grant universities serving African-American students in the segregated south

The egalitarian nature of the social compact-rejecting the notion that race, class, or geography should restrict access to higher education-was truly a revolutionary idea. From these early roots, the U.S. developed a system of higher education intended to provide all qualified Americans with an affordable opportunity to advance their education as far as their desire and abilities allowed.

The social compact was further strengthened with the GI Bill, one of the crowning achievements of post-WW II America, which provided the means for veterans returning from World War II to get a college degree. Because of the G.I. Bill, the U.S. developed the workforce to build the world's most successful economy and the largest middle class in the history of the world. All of this was made possible because higher education was seen as a "common good" and, as a result, was the target of substantial public investment so that our nation's citizens would have affordable, accessible, high quality higher education. In the decades that followed, with additional financial aid through programs like the Pell Grant and with greater public support to expand access to publicly funded colleges and universities, the doors of higher education were opened to larger and larger numbers of people. As a result, the U.S. was the first nation in the world to "democratize" higher education and by the 1970s the social compact had reached its full flowering.

Unfortunately, over the past several decades, the social contract has begun to unravel. One need only examine the Pell Grant program-America's primary "work horse" for college aid-to get a sense of the compact's decline. At its inception in the 1970s, the Pell Grant paid for more than 80% of the average cost of attending a public university in America. Today, it pays less than 40% of the average cost of attendance.

The fraying of the social compact is, ironically, rooted in its overwhelming success. As college attendance became more common place, it led not only to the collective advancement and success of our nation, but also the personal advancement and success of individuals. This trend refocused the public perception of higher education, shifting the societal attitude toward higher education as more of a "private benefit" than a "public good." While there remains a general sense that we are all better off if every qualified student has a chance at a college education, this view has been eclipsed by the notion that individuals should pay a larger share of the cost, since they will be the major beneficiaries.

As a result of these changed attitudes, over the past several decades, higher education has experienced a sharp decline in the rate of investment at the federal, state and local levels. In the mid-to-late 1970s, as a nation, we invested more than $10 for every $1000 of personal income in higher education. Today that investment stands at about $6 for every $1000 of personal income. Unfortunately, the disinvestment trend has accelerated in recent years due to rising healthcare and energy costs, and mandated spending for primary and secondary education. A recent study by State Higher Education Executive Officers (SHEEO) shows that state investment on a per student basis, adjusted for inflation, is at an historic low.1

Complicating this transformation in the public perception of higher education is the dichotomy that exists between the "collective" attitude and "individual" opinions. Ask any parents and they will almost certainly say that they want their child to have access to an affordable, high quality college education. They recognize the importance of higher education in today's world as a means of personal advancement. Yet as a society, we continue to enact public policy decisions that move us away from the social compact of assuring affordable access to education from one generation to the next. Paradoxically, it seems that just as we have reached the apex in appreciation for the need of a college education, we have also reached the nadir in public support for higher education.

There are two critical consequences of this decline in public support. First, tuition has risen at an excessive rate in recent years. At the typical flagship public institution in America, the academic cost of attendance (mandatory tuition and fees) is now in the range of $5,000 to $7,500, or about 11 to 17 percent of median family income. Those figures are up from 1 to 5 percent of family incomes in the 1960s. As a result, the cost of a college education is becoming an insurmountable obstacle to attendance for too many students, especially those coming from low income families. A report from the Advisory Committee on Student Financial Assistance2 estimated that in 2001 there were more than 170,000 college capable students who did not attend college because they simply couldn't afford it. Undoubtedly, the number has grown since then due to increased demand and a further escalation in costs.

A second consequence of the declining rate of public investment in higher education is that campuses have not had the resources necessary to expand capacity and accommodate the growing student demand. In some states, even community colleges-a vital open access entry point to post secondary education-have been forced to cap enrollment due to inadequate funding.

In part because of the erosion in the social compact, we are developing-for the first time in our nation's history-an education deficit in relation to rest of the industrialized world. A few decades ago, we were the leader in high school completion rates and in the college participation rates of high school graduates. Today, we rank seventh among industrialized nations in high school completion rates and ninth in post secondary participation rates. We are the only industrialized nation with a declining college participation rate. And, our middle and high school students rank near the bottom among all industrialized nations in math and science achievement.

These are warning signals that, if not addressed, could lead to the demise of the U.S. as the world's leader in knowledge creation and dissemination, especially in science and technology. If this were to happen, it would surely mean our demise as the world's economic super power.

Beyond the impact on our economic and global leadership, if the doors to higher education are closed in today's information age, the "American Dream" of upward mobility will be short circuited. Already, students coming from families in the lowest quartile of income have less than a 5 percent chance of earning a college degree, whereas students coming from families in the top quartiles of income have greater than an 80 percent chance of earning a degree.3

Given the importance of higher education for success in today's world, it is no exaggeration to say that unless this situation changes, we will create a large, permanent underclass in our society that not only undermines the ethos of America as the land of opportunity, but may ultimately become a serious threat to our democracy. As Thomas Jefferson noted, the quality of freedom and democracy we enjoy is directly tied to the knowledge and education of our citizens.

Recapturing the sense of higher education as a common good-reestablishing the "social compact"-is a huge task but one that needs urgent attention. Perhaps the first step in rebuilding the compact is for the higher education community to recognize that it bears some responsibility for its decline. Regrettably, we are seen by too many in the larger society as resistant to change, insensitive to rising tuition costs, possessing an "entitlement" mentality when it comes to public funding, and oblivious to the need for cost containment. If we are to recapture the public's sense of higher education as a priority for investment, we must address these perceptions.

From my perspective, there are a few key things we in higher education can do both to rekindle public for support of the compact and to work within existing parameters to improve access and affordability for those most in need of our help.

First, we must make a much more serious commitment to controlling the growth in the costs of our operations. Educational expenditures at many colleges and universities across the country are rising about 4.5% to 5% annually. In a nation with an entrenched 3% inflation rate, this is not sustainable long term no matter what our sources of revenues. Along with this fiscal reality comes the fact that we have little hope of regaining public support for increased investment unless we are seen as more effective, cost-conscious stewards of public funds.

To address this issue in Maryland, the University System of Maryland launched an effort two years ago that we call our Effectiveness and Efficiency Initiative (E&E). Lead by our Board of Regents, the E&E initiative consists of a systematic examination and reengineering of all of our academic and administrative processes. We have increased faculty classroom responsibilities, limited the number of credits required for most degrees, expanded on-line educational opportunities, required credits to be earned outside the classroom, and leveraged our power as a system to drive down prices and negotiate favorable contacts with suppliers.

Our commitment to these E&E efforts-with its $100 million plus in cost containment, cost avoidance, and alternative revenue generation over the past two years-and our ability to align our budget request more tightly with state needs and priorities were specifically cited by Maryland's Governor as he provided a funding increase (5.5%) last year and a very significant increase (14.5%) this year. With this increase, we were actually able to freeze tuition rates for the 2006-2007 academic year.

A commitment on the part of higher education to meet the demand of accountability-in every sense of the word-represents a necessary first step toward revitalizing the social compact. Once we get our own house in order, we will be better able to make the important case that the nation's prosperity in the decades ahead hinges upon a greater investment in higher education and that we are doing our part to hold down the growth in college costs.

My second proposed action is the need to reestablish the primacy of need-based financial aid. The founding principle for the distribution of financial aid in higher education was to support students who would otherwise not be able to attend college. Starting in the early 1990s, trends in the use of financial aid have altered this founding principle. At the state and institutional level, need-based aid experienced relatively modest increases while merit-based aid, which is not means-tested, has virtually exploded. According to a recent study by Donald E. Heller4, from FY 1996 to FY 2004, merit aid on college campuses grew 212%, while need-based grew by only 47%.

It can be argued that the turning point came with the introduction and subsequent expansion of the HOPE Scholarship Program in Georgia and its counterpart in other states. The reasons behind this approach seemed laudable: attract outstanding students; keep bright students from leaving the state; reward academic achievement; and ease the financial burden on middle-class families. We have, however, gone too far in the use of merit aid. For the most part, the rise in merit aid has had the effect of subsidizing students who are already college bound, while holding down the growth in aid for truly needy students. For example, in Georgia the vast majority of the expenditures on the HOPE scholarship program go disproportionately to white students and to students who likely would have attended college without the assistance5.

To make matters even worse, many of these HOPE-like programs are funded through state lotteries, which have been proven to be a regressive "tax" on the poor. So, in effect, we have a morally indefensible situation where low-income families are subsidizing the higher education of youth from middle and upper income families.

Two years ago, we launched a study of the USM institutions to examine our use of financial aid and we didn't like what we discovered. We found out that we were just as guilty as most of the rest of higher education in paying too little attention to our financially neediest students. We learned that our poorest students were graduating with 25 percent more debt than the average student. We decided that we could not allow this situation to continue. As a system, we established a new policy that stipulates that by fiscal year 2010, our lowest income students must graduate with 25 percent less debt than the institutional average. This is a requirement at every one of our 11 degree-granting campuses. And, it is just one of several policy changes that have resulted in a significant increase in financial aid for those who need it most. The average across the system is a 30 percent increase in need-based aid for FY2007.

We in higher education are responsible for creating a false dichotomy with our aid programs. Need-based aid already takes "merit" into account. By gaining acceptance to an institution, the student has to meet certain requirements; has to demonstrate merit. Most merit aid has no requirement to demonstrate need, while ALL need-based aid requires the demonstration of merit. For the good of our nation, future growth in all financial aid programs-at the state and institutional levels-should target need-based aid.

As important as the steps I have outlined are, the fact is higher education cannot simply "manage" its way out of reduced support and growing enrollment. We will not prosper as a nation in the decades ahead if we are not successful in our ongoing efforts to convince the public that we need and deserve greater investment of public funds.

This brings me to my third and final point: We in higher education must learn to speak with a common voice and convey a unified message. The American Council on Education has recently launched an initiative to help accomplish this task. Solutions for Our Future brings together nearly 400 colleges and universities across the country with corporate partners for a national public outreach campaign designed to raise awareness about higher education's critical role in the future of our country. This multi-year national effort-with corresponding efforts at the state level-will establish a dialogue with local communities and policy makers to increase awareness of the public benefits of higher education in order to make higher education a greater public policy priority.

Through the Solutions for Our Future campaign, we will work to remind the public that higher education raises incomes and reduces poverty. Higher education creates opportunities and solves problems. Higher education eliminates barriers and elevates civic engagement. Higher education enhances social equality and creates a broader middle class. Higher education changes the lives of the people who will change the world.

These are the reasons why we must recapture the public's commitment to the social compact, as articulated in the Morrill Land-Grant College Act of 1862 and made complete by the G.I Bill and Pell Grant program. These are the reasons why we must join together to rebuild the public's support for higher education, our nation's quintessential "common good."

NOTES

1 State Higher Education Finance, March, 2006

2 Empty Promises: The Myth of College Access in America, Advisory Committee on Student Finacial Aid, June 2002

3 Business Week,February 9, 2004, A British Solution To America's College Tuition Problem?

4 Merit Aid and College Access, Center for the Study of Higher Education, The Pennsylvania State University, March, 2006.

5 Hope for Whom?:Financial Aid for the Middle Class and Its Impact on College Attendance, by Susan Dynarski, National Crosstalk, Vol. 8/No. 3, Summer 2000