Back to school on the American Dream

Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream
By Suzanne Mettler
New York: Basic Books
261 pages

the american dream is in trouble. As our economy has become more globalized and competitive, it has become harder to achieve what was once available to most Americans—a good job with a good wage, a house, and access to an affordable college education. Wealth for those at the top of the income scale has increased significantly, income for those in the middle has stagnated, and social mobility—the opportunity to move up the income ladder—has become much more difficult.

Globalization, the decline of labor unions, and the role of technology in changing the labor market are often all cited as causes of the decline of the American middle class and rising inequality. But perhaps the most significant factor is that the United States no longer has the global advantage in educational attainment. Rising college costs, indifferent public policies, and flat public investment have made this essential component of the American dream more expensive and harder to achieve for many.

Suzanne Mettler takes on this important topic in her new book, Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream. Mettler, a professor of political science at Cornell University, delivers a tour de force on the failures of Washington to live up to its responsibilities to promote sound public policies that help students obtain a college degree and, with it, a shot at the American dream. Her book is a good history on an important public policy topic. Her prescription for how we can improve higher education policymaking, however, is at best incomplete.

The promotion of higher education is one of the nation’s proudest legacies. But as Congress has become polarized and awash in special-interest money and lobbyists, Mettler says that American higher education, once a system for facilitating upward mobility, now contributes to the nation’s growing inequality. “The higher education crisis in the United States points to the demise of opportunity and the emergence of a society with caste-like characteristics,” she writes. “This bodes ill for the nation’s economic future, indicating that we will likely fall short in meeting the demand for a highly educated workforce.”

There was a time in our nation’s history when creating opportunity meant having the world’s best system of higher education. For those who can afford the top tier, that remains true. But the vast majority of American students rely on public higher education and here, Mettler argues, declining support is having an adverse effect on college graduation rates.

It wasn’t always this way. As Mettler chronicles, for more than 100 years, policymakers engaged in a remarkable series of steps that greatly extended access to higher education for Americans. From the passage of the Morrill Act of 1862 that ushered in the era of land grant colleges, to the GI Bill that opened the door to college for our World War II vets, and the Higher Education Acts of 1965, and the creation of Pell Grants in 1972, policymakers displayed a steady commitment to opening ever wider the door of opportunity to higher education.

Investment in higher education produced more college graduates, which helped spark technological innovation, which resulted in economic gains that were broadly shared. Claudia Goldin and Lawrence Katz, in their important book on this issue, The Race Between Education and Technology, argue that education began to lose that race as degree completion rates started to lag in the late 20th century, helping to usher in today’s era of growing economic inequality. (See “Learning curve,” CW, Fall 2011.) Mettler digs into that slowdown in educational attainment to try to explain why policymaking that so effectively boosted college access for much of the nation’s history has faltered. She lays blame principally with the growing partisanship that has poisoned even those issues that once seemed uncontroversial. Policymaking worked previously, she says, because Congress and the president were productively engaged in what Mettler defines as “policy maintenance,” the regular revision of public policy to ensure that it keeps up with the times, despite partisan differences.

The passage of the Montgomery GI Bill in 1987 is a good example. Wanting to extend the GI Bill to the all-volunteer military, Rep. Gillespie “Sonny” Montgomery, a Mississippi Democrat, worked diligently with fiscal conservatives from both parties for seven years (or, as Montgomery put it, at a pace “slower than a snail on crutches”) to extend the benefit to new veterans of the all-volunteer military. It may have been slow going, but it nonetheless went. Policy maintenance worked, argues Mettler, because “[i]t involved both Democrats and Republicans recognizing the value of existing programs and their constituents’ reliance on them, uniting to maintain, modernize, reform, and upgrade as needed.” The GI Bill, updated again in 2007 in a bipartisan show of support for our post-9/11 veterans, remains one of the foundations of American higher education policy.

During his first term, President Obama wanted to make student aid reform a cornerstone of his agenda. Key to Obama’s plan was to shift the student loan system to direct lending, authorizing colleges to make loans and cutting out the middleman role of banks and lending agencies and eliminating their subsidies. With the savings, estimated by the Congressional Budget Office at as much as $87 billion annually, the president hoped to turn Pell Grants into an entitlement. Obama also proposed the American Graduation Initiative, a $12 billion investment in programs to increase community college graduation rates, with an audacious goal of increasing the number of college graduates by 5 million by 2020.

As the bill moved to the Senate, it became entangled with health care reform. Partisan parliamentary maneuvering by Senate Democrats helped the student aid bill emerge. Direct lending, a policy battleground since the 1990s pitting banks against borrowers, remained intact. But funding for the more innovative features of the president’s bill, such as making Pell Grants an entitlement and the American Graduation Initiative, was cut.

To Mettler, the passage of Obama’s student aid reforms nonetheless contributed to “the largest collective increase in the generosity and availability of federal aid to facilitate college-going since the passage of landmark laws at least four decades prior.” Pell Grant recipients rose from 5.2 million in 2006-2007 to 9.3 million in 2010-2011, and the American Opportunity Tax Credit was claimed on 13.2 million tax returns in 2010. Mettler says that the lesson learned here is that “even among high levels of polarization, lawmakers can manage to achieve meaningful reforms to improve the opportunities of low to middle income Americans and to restore the promise of educational opportunity.”

It was, indeed, a hopeful moment—but it happened during the brief recent window in which one political party controlled the White House and both branches of Congress, making it more anomaly than a sign of policy vitality. Unfortunately, it seems, higher education, like many other areas of policymaking, has become just another pawn in the winner-take-all game of partisan politics being played in Washington.

Consider the problem of student loan debt, now the largest form of consumer debt outside of mortgages. Sen. Elizabeth Warren has proposed a plan to help students refinance their debt, paid for by the so-called Buffett Rule, closing a tax loophole for millionaires. Warren’s plan appears to be classic policy maintenance, but because of the extremely partisan nature of policymaking these days, its likelihood of passage seems slim.

Mettler opposes using tax credits to expand student aid, a position that seems odd given her interest in bipartisan policymaking. The popular federal tuition tax credit program, begun under President Clinton with support from both parties, is one example of cross-aisle collaboration and is now a mainstay of higher ed policy. But Mettler calls tuition tax credits a “reckless response to the challenge of improving the nation’s college graduation rates” because of the drain on the treasury. It would be hard, however, to put that genie back in the bottle given its wide appeal. Mettler comes at these issues with a strong left-of-center view, and that sometimes gets in the way of her very useful analysis of how we can make better public policy.

In the end, Mettler proves to be better at diagnosing the problem than providing a cure. She says we must “make elected officials more responsive to ordinary Americans and diffuse the forces of polarization and plutocracy” that make getting things done in Washington so difficult. But identifying what needs to be done and laying out how to make that happen are two very different things. One useful higher education investment might be to send our lawmakers back to school for a refresher course on policy that advances the American dream.

John Schneider is an education policy consultant and a fellow at MassINC’s Gateway Cities Innovation Institute.