Create a System of Federal Universities

Politics is often depressingly free of policy substance, but that is not an excuse to stop discussing new, bold proposals. In the ceaselessly political world of higher education, where there is little agreement over even the basic role of the university in society, now is a particularly urgent time for creative thinking. My proposal, following and building on propositions by economist and columnist Noah Smith and literature scholar Freddie deBoer, is that the federal government could address a great variety of significant problems by pursuing a renewed investment in the American public: building a system of federal universities.

To place this idea in context: America has long relied on a mixed system for post-high school education. There are private small liberal arts colleges, private research universities, public research universities, public community colleges, and, more recently, private for-profit schools and online schools offering certificates. While colleges and universities receive federal grants to conduct research, most public funding to run and maintain these institutions comes from state governments. It is important to have an accurate image of the environment: while the word “college” sometimes connotes a four-year, selective, residential college that a person completes immediately after graduating high school, the top 25 universities and top 25 liberal arts colleges have combined enrollments of only 1.4 percent of all students. Despite a lack of media coverage of community colleges, 44 percent of all undergraduates in the US, many of whom are in their late 20s and 30s, attend such institutions.

The modern political atmosphere of higher education is one full of accomplishment and promise, but also of great anxieties. The system is grossly imbalanced, with community colleges, whose graduation rates are often less than 30 percent, disproportionately serving low-income students, who are in greatest need of the support and stability a college degree brings, and black and Latino students, which helps perpetuate racial disparities. The situation has worsened at virtually all non-elite schools since the 2008 economic crisis. States have cut back on funding, sometimes to truly jaw-dropping degrees — Louisiana, the worst offender, has cut its higher education budget by 41 percent since 2008. These funding cuts, as well as administrative bloat and an arms race of amenities to attract wealthy students, have, despite the ongoing relentless rise in tuition, resulted in cuts to academic departments, continued replacement of tenured faculty with minimum-wage adjunct professors, and surging student debt.

American elite schools like Stanford, shielded from these issues by gargantuan endowments and generous alumni donations, are deservedly considered the finest in the world. But the vast majority of American college students do not enjoy the luxuries of need-blind admission and financial aid, instruction from secure and often famous professors, and a conveyor belt to well-paying jobs. And at least they have made it to college at all — the average wage of high school graduates is barely half that of college graduates, and their unemployment rate is nearly twice as high.

The current environment cries out for leadership, which can be provided through an ambitious plan of new federal universities. The details of the plan can be tweaked endlessly, so for the sake of example I will use the rubric developed by academic Freddie deBoer. deBoer’s full plan is not online and the print version is not easily accessible, so to write this paper I have relied on extended quotations and reporting on the plan from articles here, here, and here. deBoer writes:

…we should make the competition to lower costs while providing quality instruction even fiercer. Here’s my dream: a system of five federal universities. Northeastern American University, Southeastern American University, Central American University, Southwestern American University, and Northwestern American University. They would be explicitly oriented towards providing a cheap, quality education in the traditional sense. I’d like to shoot for a tuition of $0, and I think that is an achievable goal with the right governmental funding, charitable support, and ruthlessness about unnecessary amenities. I would settle for $2,500 a year for any student from within each geographical region and $5,000 for any students who want to go to a university from outside of their region.

Suppose that each of these universities enrolled a number of students comparable to a large state school, say 40,000–50,000. The system would then have a capacity of 200,000–250,000 students, enough to be a non-trivial player in the higher ed marketplace. These schools would not compete with elite schools, whose longstanding reputations and networks shield them from encroachment, but would draw from the pool of students considering state schools and community colleges. Colleges, which in part compete on price, now have additional incentive to hold back on tuition increases. This new system would directly help hundreds of thousands of students every year, plus potentially save countless other students from tuition hikes by visibly undercutting the market.

I have three amendments to the deBoer plan.

First, deBoer wants the schools to be tuition-free, but he correctly perceives that is difficult to sell the American public on any sort of new spending, and especially so if it is perceived to be a handout rather than a helping hand. However, requiring tuition shuts out the lowest-income students and contributes to debt. Therefore, I propose a plan loosely based on ‘pay-it-forward’ plans that have gained attention in education policy circles. Students should have an option between two payment plans. Option one is the ‘traditional’ option: they will pay tuition of, say, $3,000 a year. Option two is a variant of the ‘pay-it-forward’ plan: they can attend the university tuition-free, but they sign an agreement that entitles the university to a portion of their future income until they pay an equivalent amount, adjusted for inflation. For example, if the university sets a contract for 3 percent of future income, if a student signs the contract, attends the school, and then graduates or drops out, the university will still take 3 percent of the income earned by that student in their job each year until the total amount the student has paid back equals the amount of money they would have paid under the ‘traditional’ option, adjusted for inflation. Such a plan means that a student can dodge student debt entirely in favor of a temporarily reduced future income stream, and having both options means that each enrolling student can choose the option that is better for his or her own personal financial situation.

Second, while these universities are meant to be rudimentary and are certainly not intended to be selective, to guard against the possibility that higher-income students would enroll so heavily as to crowd out space for poor students, the charters of the universities could specify that a minimum percentage of students (for the sake of example, 35 percent) would have to be considered eligible for federal Pell Grants just in case.

Third, I believe that these universities, while focusing on teaching, should also include research centers, at least in the sciences and engineering, with accompanied increased research funding. America has long been a leader in the production of knowledge, and universities conduct the majority of basic research in the country. Sadly, American public backing for research and development is actually in the process of hitting historic lows, and the process for getting grants has become so cutthroat that only about one in five grant applications receives funding.

It is virtually impossible to overstate how important long-term research is to American life — the Internet began as a deep research project, as did nuclear power, jet propulsion, satellites, and virtually every other major scientific advancement of the past several decades. Our lifespans depend on discoveries and medicines developed out of publicly funded labs. Funding of research as a public good is considered one of the biggest no-brainers of economics, and long-term economic growth depends heavily on technological progress. American industry today, which provides the tax revenue to fund the public sector, grew out of advances in technology that the public sector was crucial to incubating. Aside from the military and elementary social insurance, it is hard to think of something more deserving of federal funding than basic research, and these universities have the capacity to greatly expand America’s already leading role in knowledge production.

These universities would also aid in ameliorating one of the biggest wastes in human capital in the US today: the imbalance of the academic job market. Getting a job as an academic is notoriously difficult, and the situation gets worse every year because universities produce far more new doctorates each year than there are new academic positions. Fewer than one in six doctoral graduates in biomedicine gets a tenure-track job, and numbers are similarly grim across the lab sciences, let alone the carnage taking place in the humanities. The mismatch means that people who have doctorates, who have great skill in their field, do not have a place where they can put their skills to work, and many end up as adjuncts- part-time, low-wage workers with no job security. As Noah Smith points out in his own article advocating for federal universities, this waste of talent is gargantuan, and these universities would serve as a place where at least some of them — political scientists, chemists, biologists, authors, academics of all stripes — could come to educate the next generation and put their skills to work.

One last major argument in favor: I have written previously about a long-term trend in America of the concentration of economic growth and college-educated talent in a few major metropolitan areas, leading to rent spikes and gentrification in those zip codes. While these few areas surge in influence, swaths of the country suffer from ‘brain drain’. These institutions should be located as to counter this growing imbalance: they should be placed in areas dealing with economic stress where university projects can attract higher-skilled workers to replenish the tax base, university affiliates can buy goods and services from local businesses, and university students can become involved in local organizations. Properly managed, and outside of restrictively-zoned and crowded areas vulnerable to gentrification, a university can become an integral part of a community. Here is one set of locations where a new university could help cultivate areas outside the gentrifying metropolises of Boston, San Francisco, D.C, etc.:

• Central American University: Flint, Michigan
• Southwestern American University: Harlingen, Texas
• Northwestern American University: Medford, Oregon
• Northeastern American University: Newark, New Jersey
• Southeastern American University: Memphis, Tennessee

So, after outlining the benefits of the plan, what is the cost? Giving an exact number is difficult, but, using the $1.1 billion University of California Merced expansion plan for 4,000 students, a median cost estimate of the one-time cost of constructing and fully setting up the universities can be set at about $50-70 billion. An extreme upper bound of the annual cost of preservation can also be constructed: multiplying the expenses of Ohio State University, a school with 65,000 students, by four, there is an annual cost of $22 billion. This number includes the entirety of Ohio State’s budget, including its various administrative programs unnecessary to streamlined universities with a purely teaching and research purpose (athletics, financial aid, community centers, amenities such as upscale dormitories, bureaucratic redundancies, etc.). 250,000 students each contributing an expected annual value of $3,000 over the long run means tuition will cover $750 million of the annual cost. A reasonable ballpark estimate of the annual accounting cost of this program is therefore somewhere in the mid-to-high teens of billions.

Such numbers are significant, and undoubtedly make passing such a plan politically fraught. But these numbers do not take into account that the incomes and employment rates of college graduates are significantly higher, so government revenues will increase as it helps educate an increased slice of future taxpayers. Nor do they take into account America’s distinctive culture of alumni generosity. And lastly, the massive economic benefits of basic research that could easily dwarf the budget of the system remain a strong possibility.

So, constructing such a system would be, at most, a small part of the US government’s multi-trillion-dollar budget, but would also help fund the revenue for said budget. But more than that, pursuing this plan will give hundreds of thousands more Americans the chance to better their minds and their futures, to learn about literature and science and economics, and then to have a better shot at replenishing social mobility and bettering their communities and families. Thinkers like Smith and deBoer have hit on an idea that combats a wide variety of modern social ills; politicians looking to make a difference should listen up.

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Andrew Granato, a rising senior studying economics, is a staff writer at Stanford Political Journal.