Higher education in America receives literally trillions of dollars’ worth of public support.
Direct support from states and the federal government to public universities has been relatively flat in recent decades (around $150 billion a year), but federal subsidies, both through student scholarships and federally-provided loans, has been massive and growing (over $100 billion a year, totaling more than $1 trillion in outstanding loans).
Many states have granted valuable plots of land to state universities.
All of these grants and expenditures pale however, in comparison to the truly gargantuan subsidy that Higher Ed receives via favorable tax treatment.
Universities pay no corporate income tax, not even on their earnings from investment, sports, or other commercial operations, and they pay no state sales tax on their purchases. Their real estate is exempt from local and state property taxes. Tuition receives favorable treatment in the federal income tax, both in the form of deductions and tax credits. Tuition and fees are exempt from sales tax. Most important of all, gifts to universities ($60 billion a year) are treated as charitable contributions, deductible from the giver’s taxable income.
The justification for all of this public support is the hypothesis that higher education expenditures are in the public interest. Is this always true?
One feature of higher education that often escapes notice in this context is the extraordinary selectivity of the country’s elite colleges and universities.
Fifty years ago, the most elite universities in the country still admitted something like a quarter of their applicants; about 15 percent twenty years ago. Today, the Ivy League schools and top research universities like Stanford and Duke have admittance rates in the low single digits. The selectivity at elite professional and graduate schools is even greater. It is clear that graduates of these select programs benefit from their selectivity, both by having extraordinarily bright and engaging classmates in their courses, and by participating in the social and professional networks made up of elite alumni. But does the general public benefit? It is hard to see how. Those who are not admitted to elite colleges actually suffer from the competition of those with more prestigious degrees. In addition, the absence of brilliant students degrades the quality of education in non-elite institutions.
Moreover, the nationalization of the college applicant pool weakens the connection between universities and their local regions, making higher education less accountable to local populations and less responsive to their varying needs.
Finally, and most importantly, Higher Ed selectivity is a major driver of the growing economic inequality and social stratification in our society.
Charles Murray, in his magisterial work, "Coming Apart," documents the growing division between the hyper-affluent, comfortably ensconced in their gated communities within “Super” Zip codes, and the rest of us. Since the college years are a prime opportunity for finding one’s future spouse, elite education doubles the inequality by systematically pairing future high-earners. Elite, selective higher education divides us into Two Nations, with little social interaction or mutual understanding. Students now in isolated elite universities would benefit from learning in an environment that more accurately represented a cross-section of the American people, outside the bubble.
The Nobel Prize-winning poet T. S. Eliot saw the dangers of such elite isolation 80 years ago. Our society is dominated by a rootless class of brainy technocrats, whose only bond is common economic and professional interest, with no social cohesion or continuity.
As a result, our national culture — the arts, literature, and philosophy — has become an anti-culture: ironic, adversarial, ideological, and transgressive.
What can be done? The problem can be easily fixed with a change in federal tax and education policy.
We can cap the selectivity of colleges at a reasonable level, say 25 percent of applicants. If a school has more than four times the number of applicants than it can accommodate, the school can distribute admissions by lottery among the top 25 percent, or to use geographical proximity to privilege applicants who live in the local region. Exceptions can be made for small and technically specialized programs, like physics at Cal Tech or the Julliard School of Music. Programs that seek instead to develop the talents of generalists, including law and business schools, would not be exempted. Schools who reject these requirements would be denied federal student aid and tax-exempt and tax-deductible status. The rule would apply to both undergraduate and graduate/professional programs.
This new order could be established by rule changes at the IRS and the Department of Education, without Congressional approval.
These reforms would result in a salutary decentralization of power and privilege in our society. They would eventually make it impossible to have a federal Supreme Court consisting entirely of graduates of just two elite law schools.
Rob Koons is a professor of philosophy specializing in logic, metaphysics, philosophical theology, and political thought. He is the author and editor of six books, including "The Atlas of Reality: A Comprehensive Guide to Metaphysics" (with Tim Pickavance, Wiley-Blackwell, 2017). He has been active in conservative circles, both nationally and in Texas, including the Intercollegiate Studies Institute, the National Association of Scholars, the Texas Public Policy Foundation, the Philadelphia Society, and the Austin Institute for the Study of Family and Culture. To read more of his reports — Click Here Now.
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