More Proof that Higher-Ed Sticks It to the Middle Class

Source: American Enterprise Institute

As the cost of attending top four-year college marches relentlessly higher, students from higher-income households are doing just fine: Their family incomes are matching the increase in tuition, fees, room and board. And lower-income students are faring pretty well, too: Scholarships and financial aid cover most of the rising costs. So, if the affluent and the poor aren’t suffering, who is feeling the pain? The middle class.

A new report by the American Enterprise Institute shows that the big losers from the higher-education business model for leading four-year institutions — aggressive increases in tuition and other expenses offset by generous financial aid for lower-income students — has suppressed college attendance by the middle class.

“We find that, contrary to popular perceptions, the share of students at the 200 more selective colleges who are from low-income families did not decline over the period we studied,” write Jason D. Delisle and Preston Cooper in “Low-Income Students at Selective Colleges: Disappearing or Holding Steady?

After factoring in grant and scholarship aid, annual net tuition prices at selective colleges have increased by only $11,358 for low-income students since 1999-2000, after adjusting for inflation. For high-income students, the increase was $8,162. …

The strongest trend in the data is a decline in the share of students in the middle two income quartiles. In other words, the enrollment gains of high-income students in the mid-2000s came at the expense of middle-income students.

This trend has received relatively little attention from the education community and the national media. It suggests that the narrative regarding income stratification at selective colleges is only half right. Enrollment at selective colleges has changed over time, but it is middle-income students, not low-income students, are becoming less represented on these campuses.

In the 1999-2000 academic year, 39% of the students enrolled at the top 200 institutions came from the second and third income quartiles. By the 2015-16 academic year, the percentage had fallen to 29%.

 

Bacon’s bottom line: If you wonder why the American middle class is feeling all cranky and out of sorts, is voting for crazy candidates, and seems immune to the what’s-the-matter-with-Kansas narratives peddled by the intellectual elites, it’s because of things like this. Upper-income Americans are paying more for tuition than ever — but they can afford it. Their incomes are increasing, too. Lower-income Americans are treated with great solicitude by college administrations and boards of trustees (comprised overwhelmingly by handsomely paid elites) and given huge breaks on their tuition. The middle class, especially the second quartile (as can be seen in the graph above) is left sucking hind teat.

Combine what’s happening in higher ed with what’s happening in health care, another sector where costs are running out of control. Affluent Americans are insulated from rising medical costs because their incomes are rising. Meanwhile, the political class extends its solicitude to lower-income Americans by expanding Medicaid. What does the middle class get? Not much of anything.

Similar arguments can be advanced for the effects of energy policy, foreign trade, immigration policy and more. Then toss in the insufferable smugness, arrogance and moral condescension of elite opinion makers, and it’s no wonder so many working- and middle-class Americans feel alienated from the political status quo. It explains a lot about what’s happening in the country today.

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9 responses to “More Proof that Higher-Ed Sticks It to the Middle Class

  1. And when they let big companies effectively take over your land and permanently diminish your net worth by reducing your use of your land, putting a dangerous pipeline through the middle of your business, refusing to consider your uses and refusing to allow you the safety of additional distance available on your property while also refusing to fund safety from industry or government, it adds insult to injury. No one has the opportunity to fulfill their dreams in this country today. Anything you attempt to build can be taken from you at any time. There is no help for you, just support for the big business earning private gain by using a false public claim of benefit. Can’t blame folks for saying why bother? The system is stacked against me.

    • Yeah, I feel your pain.

      We can argue whether or not the pipeline serves a public purpose. But whether it does or doesn’t, I wouldn’t want to be in the pathway of one. I know it wouldn’t solve your problem — you don’t want a pipeline under any circumstances — but perhaps Virginia could re-jigger how compensation is calculated to take into account 21st-century influences on land values.

  2. The thing is – the “solution” seems to be to take away from the lower income to help the middle class… eh?

    I favor money that goes to the student – any student – on a means-tested basis then let the student use that money to pick what is best for them – with some caveats to guard against the fly-by-night guys…

    but having middle class folks advocating taking away from those with less in come with them is really selfish and wrong….

    • Larry wrote: The thing is – the “solution” seems to be to take away from the lower income to help the middle class… eh?

      Financial aid like Pell Grants provides some of the tuition assistance for lower income students. But at selective institutions, the practice is for the school to charge more for middle class students and use the revenue to provide aid to lower income students. This redistribution even happens at state institutions in Virginia. In this second case, the statement “take away from the lower income to help the middle class” isn’t really right.

  3. To do a bit of a cross-reference, I think it was the Washington Post editorial Jim posted that pointed out that Metro faces huge funding cuts from Virginia and Maryland if it couldn’t get its costs under control. Violate a cap, and the funding would disappear. The legislature is quite proud of that approach.

    Why pray tell won’t that work with the state universities?

  4. Steve, at least part of the tuition/fee run up is due to the restructuring act from a while back. I believe it is still in effect. With the restructuring act (at least as executed by UVA and W&M) is to use revenue increases to provide more aid to lower income students (expanding affordability). What you propose would at least in part collide with that.

    • Collide with it? I’d kill that sucker dead. I think the practice of layering in transfer payments from students who can pay to students who cannot is an inappropriate way to finance aid. In many cases it ends up part of the student debt. General tax dollars should be funding need based scholarships, supplemented by giving (and FYI I do give.) There should be a big bright sticker on every tuition bill that informs people of this hidden tax, which varies from institution to institution.

      • OK. I was just thinking of the irony that the General Assembly, to some extent, sanctioned higher tuition and cross subsidies in the restructuring act and now many members don’t like the outcome.

  5. Very interesting article, Jim. And very interesting comments.

    I suggest there are two general problems here:

    The Higher Education Establishment in Virginia is running out of control, driving costs sky high, so as to gain and maintain its own political and financial advantage. Meanwhile, and as a result, the education of American kids suffer, particularly the kids of the middle class, while the Higher Education Establishment feeds like pigs at the trough of money and privilege supplied by the American tax-payers, tuition-payers, and government subsidized lenders who are allowed to load debt onto middle class students in order to subsidize the privileges and prerogatives of the Higher Education Establishment. This corrupt system put in place by the Higher Education Establishment needs to be wrung by its neck, and vigorously reformed by the force of political outsiders.

    As Jim points out so well, there is a class war going on in the country. It is being waged by the elites as they are allied with “certain designated minorities” against the middle classes and unprivileged minorities which heretofore have been, and still are, the backbone of this country. Finally, at long last, after much abuse as Jim points out in this post, the middle class has roused itself from its lethargy, and begun to assert its rights and its rightful place in this nation. Hence, the rise of Trump, as Jim suggests.

    This monumental and historic clash has only started. One of its battle grounds needs to be the halt of the illicit transfer of dollars from the middle class to pay for the education of the other defined classes that are preferred today by the ideology of the Higher Education Establishment, both in terms of admission and how those preferred classes and groups of people are preferred over all other groups by reason of government subsidy and other institutional bias. These unfair subsidies and biases stagger the mind. They run from preferences given to basketball players and college administrators to the punishments inflicted on Asians by reason of their race alone. The power to exercise this bias and racism must be stripped from the hands of the Educational Establishment, starting with the admissions and financial aid process.

    All of this will require the further political organization of the middle class, and their exercise of political power using all legal means necessary. This may well trigger illegal means by them or their opposition. We are already witnessing these activities, at Charlottesville for example. This has now just started. Hold your hat, the bumpy ride has just started and will not end until it is over, really over by reason of profound change, absent strong leaders.

    We now have reached a point of nearly out of controlled factions. As Madison feared. A great revolution is here, as Jefferson predicted.

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