Home > Uncategorized > Privatization of public education

Privatization of public education

from David Ruccio


For the first time in American history, students in more than half of all U.S. states are paying more in tuition to attend public colleges or universities than the government contributes.

The privatization of public education has been under way for decades but this inflection point was hastened by deep cuts states made to their higher-education appropriations in the midst of the Second Great Depression.

For the United States as a whole, according to a new report from the State Higher Education Executive Officers Association, students and their families were forced to come up with almost half (46.2 percent) of total educational revenue for public colleges and universities in 2017. They had to pay only 28.8 percent of the total in 1992, a share that had risen to 36.2 percent in 2007.

Increasingly, public higher education in the United States is public in name only.

And the privatization of the public educational system is costing the American working-class dearly. In 2016, net tuition for one student (full-time equivalent) came to 10.9 percent of median household income. That’s almost double what it was in 1992: 5.7 percent. Even as recently as 2007, it was only 7.9 percent.

While public financing for higher education has improved in recent years, the overall trend of less public support and students having to shoulder more of the burden continues.

After the crash of 2007-08, educational appropriations dropped 24 percent over four years, to $6,525 in 2012. This was largely due to accelerating enrollment growth (especially in community colleges) and the lack of proportional funding increases. Reversing this decline, appropriations have now increased for five straight years: 2.0 percent in 2013, 4.9 percent in 2014, 5.0 percent in 2015, 1.6 percent in 2016, and 2.5 percent in 2017. However, in 2017 states appropriated almost $2,000 less per student than they did in 2001, and $1,000 less than before the crash.

The same question applies today as when I wrote about the problem of higher education back in 2016:

What’s the American working-class to do? The same as in many other rich countries: demand free higher education for all high-school graduates who want to attend an in-state public college or university (and, while they’re at it, forgiveness for the student debts they’ve been forced to take on in order to attend increasingly out-of-reach public colleges and universities).

  1. patrick newman
    April 3, 2018 at 11:31 am

    Possibly worse in the UK where tuition fees are £9250 ($12,950 @ $1.4/£1). Although paying off the loan does not start until earnings reach £25,000 ps ($35,000) the loan board (most students have to take out a loan) charges 6% interest pa. The loan is written off after 30 years so not surprisingly many loans are only partially paid back. The fee level also sees Vice Chancellors earnings rocket (e.g. £440,000 pa) At least the Labour party is promising to abolish fees and return higher education to being a public service. The corporatisation and commercialisation of university education is well advanced!

  2. lobdillj
    April 3, 2018 at 2:06 pm

    Privatization of public services has been sold with the mantra, “Whatever government does can be done better and cheaper by private industry.” It is a bold face lie.

  3. April 3, 2018 at 5:00 pm

    If one wants to attend a public, non-selective admissions, traditional campus education then the problems of cost are egregious. It gets worse, even with “discounts” as institutions become more selective and enter the realm of the privates.

    In the olden days, students lived in garrets (now slum housing at high prices) and focused on their education, stripped of the amenities and non-academic persiflage. Today, the amount of money directly attributable to faculty and to needed infrastructure are a small percentage of the total costs. Additionally, there are post secondary degree paths for the basic degree that actualize those costs.

    Just like buying a car, one can go for the basics or upscale even though most of the additional costs are not fully utilized, but, like designer clothes, reflect a different value proposition. With the increase in older enrollments, often with other obligations, the differential cost of unrealized opportunities increases.

    Unfortunately, as has been pointed out, a college degree is becoming more of a signal than a measure of competence and that places social/cultural pressure on upscaling the degree rather than the competencies. And therein lies the problem. How much of the cost goes towards buying perceived and/or unrealized social/cultural benefits.

  4. Econoclast
    April 4, 2018 at 7:02 am

    In 1964, the year after I graduated with a BA, the tuition (they called it a fee) for a resident of the state to attend undergrad classed was $65 per term. That “fee” was $6500 a half-century later in 2014. The $65 converted to 2014 dollars with the CPI index comes to about $500. It would be interesting to see a campus-specific study to see what accounts for this immense difference.

    • April 4, 2018 at 9:38 am

      Econoclast, regulators tell lots of ironical jokes about the situation you describe. But they all come down to the same ending – lots more mouths to feed. When a service or product is moved from provision as a public good to a “competitive” private market the number of people (including companies) lining up for benefits (a piece of the money pie) grows. In the case of public (now private) education those added to the list include: school administrators, school faculty, stockholders, advertisers, consultants, legislators, politicians, the media, and many more. Consequently, the price of the now “competitive” education for the lost student increases. Often many fold.

      • lobdillj
        April 4, 2018 at 12:23 pm

        Amen! The transformation to the oligarchs’ wet dream has gone too far to be rectified by nonviolent means.

      • Econoclast
        April 4, 2018 at 3:46 pm

        I still want that study that would show details about what has happened to this still-public university. Perhaps it could show us how many of those joking regulators are captured and by whom.
        I live in a state whose highest-paid public employee enjoys a million dollars a year from the public employee’s retirement system, an unfunded liability that is a major factor in the current budgetary crisis afflicting most counties in the state, a couple heading for bankruptcy. An example of the chickens coming home to roost from bad management of the public trust.
        How many more mouths to feed could there be at a public university whose student body size was capped back then and still remains the same? Not enough to account for a tuition increase of 1000x!

      • Craig
        April 4, 2018 at 6:57 pm

        Ken and Econoclast,

        You do realize that when you’ve replaced the monopoly paradigm of Debt Only with the primacy of the new paradigm of Monetary Gifting you’ve also ended the paradox of thrift which means that systemically the economic virtue of thrift is no longer inhibited. Pair this with the fact that with a sufficiently large dividend policy transfer taxation immediately becomes redundant and is able to be eliminated. Then take the insight that MMTers largely punt on, that is that by merely maintaining legal tender laws re-distributive taxation to fund government is basically unnecessary and you can eliminate income tax costs for both enterprise and the individual as well. Finally, as private finance is post retail sale and thus exposed as parasitical and a huge source of additional systemic costs, a public national bank/national monetary authority would be able to eliminate virtually all of those costs too.

        Further policy and regulation encouraging competition and innovation would be a part of such a system, and even though the disruptive factor of AI will inevitably militate toward a falling employment participation rate there are a large variety of regulatory and assistive ways to turn that apparent negative into a positive if we simply align such efforts with all of the aspects of the concept that is behind the new paradigm of Monetary Gifting.

  5. Craig
    April 4, 2018 at 7:46 am

    If we implemented a universal dividend of $1000/mo. to everyone 18 years of age and older and also had a discount/rebate policy of 50% at the point of retail sale, that would give every college student effectively $2000/mo. of potential purchasing power. If they went to a university that charged $12,000 tuition/yr and was reduced to $6000/yr by the discount/rebate policy they could pay $500/mo. to the university and pay off their tuition each year and so end up with no debt when they graduated. And they’d still $500/mo. left that would purchase $1000 worth of goods and services.

    How much of a no brainer are these two policies?

    • April 4, 2018 at 7:24 pm

      Those policies are spectacularly inflationary, trillions of dollars of new spending, probably more than all current government spending put together. So they cannot work, they would just make things a lot worse. Really isn’t much more to say about it than that.

      • Craig
        April 4, 2018 at 7:58 pm

        Uh, you forgot that retail sale is the terminal expression point of all monetary/price inflation, and with a 50% discount at that point as well as a reflective discount/rebate policy at the point of sale between business models along the entire economic process toward its ending point at retail sale….how does that translate into inflation????

        Paradigm changes are made of such problem resolutions.

      • April 4, 2018 at 8:25 pm

        It is not too clear what you mean by discount/rebate policy. If you spend $10 on food say, the government gives you $5?. The retailer gives you back $5? But in any case, sellers can change prices so that 50% of the new price is still twice or ten or 100 times the old one. I repeat, the first policy is spectacularly inflationary and the second seems likely to be if it were described more precisely.

      • Craig
        April 4, 2018 at 9:20 pm

        The retail merchant gives the consumer a 50% discount on every product or service they sell. The merchant’s accounting department presents the proof of sale and discount and a monetary authority specifically mandated to distribute the total discounts back to the merchant does so, so they can be whole on their overheads and margins of profit. Simple, elegant and effective.

        A reflective discount/rebate policy of sufficient percentage (say 10%) to insure business participation and that exceeded the spread of prices between competitors could also be implemented between business models on the path toward retail sale.

        Commodity markets? They could largely operate as before, although we’ll need to stop the complete idiocy of thinking we can have a business model with a virtual monopoly on credit and credit’s forms within a primary ethic of profit. That is just insanity. A publicly administered banking system guided by the new ethical concept behind the new monetary and economic paradigm might grant rationally limited leverage for speculation. Also, as a publicly administered bank has no need to profit any notes created by it could be 0% and in fact finance could also then be legitimately folded into the end of the economic process and thus be able to further benefit both enterprise and the individual via the discount/rebate policy. Private finance/financial services would be reduced to advising and intermediation of monies already created and saved.

      • Craig
        April 4, 2018 at 10:44 pm

        And by the way hyper-inflations never occur without certain catastrophic circumstances preceding them like heavy indebtedness, war and/or a large loss of productive capacity, and complicit central bank issuance of credit to leverage and short the currency afterwards.

        You “normal” garden variety inflation of 3-4% per annum under normally competitive non-catastrophic circumstances would be inconsequential with the 50% discount/rebate and dividend policies in effect.

  6. April 4, 2018 at 9:48 pm

    Thanks for the clarification. In other words, for each sale, merchants get from the government a sum equal to what the consumer actually paid. Or every time you buy something, the government goes halfsies with you, but lets you have the whole thing you bought. A sales based universal dividend to retailers or to consumers. This is very clearly spectacularly inflationary, probably even more than the universal dividend to every person, which would set off massive inflation just by itself. As I said there is not much else to say. So I won’t.

    • Craig
      April 4, 2018 at 10:54 pm

      Not looking at/not comprehending the fact that retail sale being the terminal end of the economic process where production becomes consumption and is at the same time the terminal expression point for any kind of inflation….will not make your assertion of inflation correct. Carry on.

  7. Craig
    April 5, 2018 at 12:43 am

    Here’s another truth for economists and pundits on both the left and the right to chew on:

    The whole concept of free markets is false, a delusion. Such are actually in a state of chaos. For humans and human systems there is no actual freedom except amongst known and ethical barriers. If neither the lower bound of cost nor the upper bound of price is effectively regulated that economic system is chaotic. Ethics, as we see, are not easily enforceable in chaos. How convenient for dominating powers.

  8. April 5, 2018 at 9:02 am

    It’s difficult to change who you are. You’ve been socialized to eat with metal utensils, urinate in private rooms, sing (at least hum) the national anthem, and buy what you want with money. You’ve also been socialized to value wealth such that the more wealth one has the more important and relevant one is. Obviously, the process is not fool proof and there are differences based on such factors as birth date and place, language, and pre-existing culture. It is this cultural socialization that allow us to live together and survive as a species. So, when we want to change things like what money is, how its used, who has a lot of it, and who doesn’t; things like who and how are schools controlled there is push back. As both Hitler and Stalin observed long ago, there are two possible responses to the push back. Re-socialization and physical violence. Econoclast, I agree that research on the history of these developments would help. But eventually, we must design a strategy to kill what we want to kill and change what we want to change. All of it is an uphill fight against existing socialization. We can learn from our opponents, however. Look, for example at how right-wing propagandists have over the last 50 years revered the direction of over half of the American “way of life.” Their techniques are brutal and effective. Do we need to be equally brutal, or can we achieve similar ends with subtle changes and stealth? If we plan to reverse the libertarian society now in the process of being born, we’ll need to be effective and focused. And we’ll need to do it quickly.

    One of the problems facing both scientists and ordinary people is they often take their theories as inevitable, or as commenters on this blog often put it, real. All theories are agreements among the people involved that this or that exists and works as follows. Physical scientists call these theoretical constructs. Inflation exists in this way for economists. Economists ask, does $1 purchase the same, more, or less of a group of items this year as last. And from this answer values for inflation are computed. If the question isn’t asked and answered, then inflation does not exist. This limitation often interferes with efforts of both economists and ordinary people to create change. Their theories are “real” for them. They find it difficult to remake them. These are things of which we need to be aware as we struggle to undo what libertarians have created. Perhaps an effective way to recall all this is to consider it pragmatically. Constructs like inflation or finance are known by their effects, but those effects don’t mean the constructs are inevitable or real.

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