THIRD LEVEL EDUCATION is in a financial crisis that will only get worse, not better.
That fact was both the rationale for the Minister for Education to ask Peter Cassells to head the expert group on Future Funding of Higher Education in 2014 and a major theme in the committee’s 2016 findings.
In recent weeks, the Dáil has been debating the so-called Cassells Report’s suggestions for creating a new, sustainable funding model for Ireland’s universities.
The Cassells Report’s investment proposals
The Cassells Report’s proposals of creating an “employer-exchequer investment mechanism” and/ or or starting a student loan programme will worsen the growing crisis in Irish third-level education funding.
I speak from experience. I’m a professor of American history and one of the 40 million Americans paying down more than $1.3 trillion in student debt obligations.
Having businesses and families underwrite universities is fundamental to the way Americans have entrusted the market to expand third-tier schooling. Congress and state legislatures increased direct financial support for colleges and universities after World War II but never provided robust, sustained aid.
Policymakers instead pushed them to compete for grants, students, and donors. That method seemed ingenious. Those revenue sources initially increased the number of schools, degree programmes, and graduates far faster in America than in Europe.
This approach caused America’s higher education problems
That approach actually caused the problems that now threaten American higher education, whose “undoubted excellence” the Cassells Report contributes to “large philanthropic donations, which are supported by the general taxpayer through tax breaks.”
Left unsaid was that much of that support has come from businesses looking to cheaply outsource research, development, and workforce training in a manner alarmingly similar to the Cassells Report’s suggestion that the Irish government let businesses decide what skills that they need and are willing to help, underwrite.
Corporations benefit but social welfare programmes suffer
Gifts from American corporations often proved more beneficial to businesses than to students, colleges, and taxpayers.
Aerospace firms pledged millions of dollars to public and private universities in the American Far West during the early Cold War, when that sector was a major wealth producing industry.
Engineering and science departments geared toward that field’s immediate needs now struggle to attract students and donors after manufacturers used profits to move production overseas to serve new markets and further slash their operating expenses.
Those companies didn’t bear the burden of paying off their initial investments. Leading executives demanded state and federal governments let them deduct gifts from their tax bills after WWII.
Those write-offs increased returns on donations but also reduced the revenue local, state, and federal governments had to adequately, much less robustly, fund social welfare programmes, including the grants that help pay low-income students’ tuition bills.
Keeping government costs down but hurting students
The Cassells Report noted that student assistance programmes have become burdensome.
Leading educators had hoped the 1965 Higher Education Act would represent a new national commitment to America’s universities. Congress and President Lyndon Johnson cared more about keeping government costs down.
They even celebrated that the law didn’t give any student an “un-American free-ride.” The government instead gave schools money to put together packages combining loans, scholarships, and part-time jobs for individual students based on their unique needs.
Later changes to that legislation did increase direct student support but grants were small and came at the expense of government funding for schools, which would have kept fees down and doors open.
Students finish $30,000 in debt
Since the 1970s funding cuts and declining donations have forced schools to either close, merge, or raise fees. Tuition has generally outpaced inflation but allocations never kept pace with need.
The number and percentage of families who can pay out-of-pocket for college expenses has steadily decreased.
Students now generally finish with about $30,000 in debt. That financial burden has been linked with young people living at home with their parents, being unable to buy homes, delaying marriage, postponing childbirth, and struggling to pay off loans.
Borrowing has been the most beneficial for bankers. Government investigations in the 1990s revealed that the loan programme cost taxpayers more than direct support for schools.
By then, financiers had already built a vast industry around government-guaranteed loans, which offset the expense of private unregulated loans that Americans increasingly needed to pay rising tuition bills.
Lenders have accordingly fought to stop serious reforms of a financial sector that many Americans now want to eradicate or at least make more like the income-contingent approach included in the Cassells Report.
The Irish government shouldn’t emulate America’s mistakes
Hopefully the Irish government will reject the two suggestions that vaguely emulate how Americans finance third-tier schooling.
Direct state support, the Cassells Report’s third proposal, will be a much better investment in Ireland’s future.
The private sector will always be more interested in short-term gains for business than long-term needs of citizens.
Elizabeth Tandy Shermer is an assistant professor of history and a visiting research fellow at Trinity Long Room Hub, Arts and Humanities Research Institute. She has published books, articles, and opinion pieces on the history of capitalism and is currently finishing a book on the history of student loans, entitled Indentured Students.
To embed this post, copy the code below on your site
have your say