It’s a nervous time to be a university. Forget the political activism that has been convulsing campuses over the past year; the Republican tax plan is now taking aim at the money that funds those campuses, particularly elite research universities. It proposes a tax on university endowments, an end to the tax deduction for student loans, and treating employer tuition reimbursement as income. This last would not only threaten a revenue stream for colleges and universities, but also make it much more expensive to run Ph.D. programs, where students normally get a tuition waiver as part of their package.
Universities are understandably concerned. And they’re not the only ones. Levying heavier taxes on education sounds perilously close to spitting on an American flag while denouncing motherhood, baseball and apple pie. So this might be a good time to ask whether we really ought to be subsidizing higher education — particularly elite higher education — as much as we are.
In theory, our nation’s elite educational system is supposed to be an engine of opportunity. And that was a very fine theory — in 1960, when America’s elite colleges transformed themselves into meritocratic institutions.
This remarkable moment in America’s past is underremarked upon; as far as I know, this peaceful and willing transfer of power is entirely without precedent in human history. In 1930, the Ivy League was basically a finishing school, a cocoon for the larval stage of a tweedy apex predator class. Suddenly, and for no apparent reason, the people running these schools (and the prep schools that fed them) decided to run admissions on a competitive basis of test scores and grades. By 1970, the schools had diversified wildly, and the academics got better and better, while the football teams — formerly some of the most followed athletic programs in the country — declined precipitously.
For a while the elite university was, if not a perfect approximation of the meritocratic ideal, at least a major force for social and economic mobility. But the new elite did not pay forward the favor that had been done for them by the WASPs. Instead they focused their newfound resources on making sure their kids were the ones who did well out of the new system.
And do well they have. But what about the folks who can’t figure out how to get themselves into a good college, or navigate the college they got into, or, for that matter, what about people who just don’t want to sit through four more years of school or have the natural academic ability to succeed at a four-year college? For them, one by one, the doors have slammed shut. And for 30 years, the only answer that has been offered to their plight is “go to college,” because the people who came through that system, and now run it, have turned “education” into a sacred fetish, so imbued with virtue that questioning its value is something close to a sin.
At least when college was often as much finishing school as academic program, people understood that economic and social value could be found elsewhere. The current system is not only self-sustaining, but also self-legitimating. The elites who come through it, after all, are smart, hardworking and conscientious, as they have to be to get through an increasingly competitive admissions process. After all that hard work, those born on third base feel as if they earned their home run … and they can’t see any reason to change the scoring system.
As a proud alum, I’m glad that the University of Pennsylvania has a $12 billion endowment to sustain it into the future. But it’s hard to see why the school needs a tax subsidy from the government to educate students with a median family income of nearly $200,000 a year. I suspect those parents will ensure that their children get educated even if the government offers no subsidy at all — and that the students could probably manage to learn even without the shiny new buildings and extensive renovations that have appeared since I left the campus 23 years ago.
The same goes for people getting Ph.D.s, and for that matter college educations; compared to the public at large, they are the best-off people in our society — the wealthiest, the best protected, the most respected. Why should any of it be tax-advantaged? If we want to subsidize something with the tax code, why not help struggling single mothers buy reliable cars so they can get to work?
Innovation, you say? If innovation needs to be subsidized, we should do that directly, through the National Institutes of Health and other scientific agencies. So too for preserving and extending other forms of human knowledge: If we need more of it, we should be willing to pay for it directly, not via a backdoor subsidy to an exclusionary system that increasingly walls off the affluent from the rest of the country. If we want to help poor kids go to school, we should pay their tuition. There is little reason to bundle these projects with a lucrative side business in entrenching the educational oligarchy; there is no reason at all that the government should help that business grow.
What we would like, of course, is to subsidize the system of 1960, the one that really did do so many of the good things we like to project onto the system of 2017. But we can no more re-create that achievement by subsidizing the old system than we can revitalize Detroit by offering Chrysler a tax break to relaunch the Plymouth Valiant.
Megan McArdle is a Bloomberg View columnist.