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Bailing Out Corporate Higher Education: What is Really Wrong with the Biden Student Debt Relief Plan

Do CounterPunch, 1 de Setembro 2022
Por DAVID SCHULTZ


Photo by Ehud Neuhaus

President Biden’s student loan debt forgiveness plan is like a dirty band-aid on a festering wound. It is better than nothing but it fails to fix the real problem of the failed business plans of corporate universities as well as the shifting way we view higher education in America.

Student loan debt is approximately $1.75 trillion. It exceeds all other forms of personal debt, including credit cards. More than forty-eight million individuals owe on student loans, with the average debt exceeding $28,000 for the class of 2020. This does not even include the money parents often incur for their children’s college education. But by many measures, the cost of college education today is significantly greater today than forty or even twenty years ago.

For many students and parents, paying off student debt is a life-time experience, forcing them into long term debt that precludes them from being able to buy a home, start a family, or take public service jobs that may not pay a lot but which may be personally satisfying or socially useful. College education may be critical to the American dream for many, but pursuing it may also be a nightmare.

Biden’s debt relief will help many individuals but there are problems with the plan. Republicans and moderate Democrats whim about the costs, even though they never seemed to fret about all the tax breaks and subsidies for corporations and the rich. For some like Bernie Sanders the problem is go big or go home. If you’re going to forgive the debt forgive it all and not part of it. For others the problem is the elitism with the plan—it helps those who have gone to college but it does little for those who have not. Given that the new class divide in America is between those who have attended college versus those who have not, the plan benefits the former and will do little to slow the acceleration of the working class away from the Democratic Party. These are all reasonable critiques—but there is a far bigger problem with the plan. It does little to address the root of the problem which is the corporatization of higher education in America and its failed business plan.

Prior to World War II higher education was elitist, only the rich and generally Whites and males could attend. Post-World War II until the 1980s was the period of the democratization of higher education. The rapid expansion of public universities, the GI Bill, and generous public funding including grants made quality higher education affordable to the poor and middle class. Higher education was viewed as a public good, not a private investment, and it along with a robust K-12 school system were seen as egalitarian institutions for advancement. Supporting higher education was also in the interest of corporate America and capitalism—it socialized the cost of training the next generation of workers.

Yet the 1980s and Reaganism changed that. The corporate profit squeeze of the 1970s transformed the link between higher education and capitalism. It resulted in government deregulation and cuts in business taxes. Among the places where cuts came to pay for tax breaks for corporations and the rich was higher education, especially to public universities. Justifying these cuts was a change in educational philosophy. No longer would higher education be seen as a public good necessitating a socializing of costs. It was now a private good or investment where students and families were expected to borrow money to pay for their education. Student debt was a great disciplining tool for capitalism. It narrowed the range of acceptable or affordable majors to what businesses wanted, and it limited the options or career paths for students to jobs that could generate enough income to pay back college debts.

Higher education responded by corporatizing. It adopted business models heavy in upper-level administrators to manage enrollment and expand services. It invested in expensive technologies and often in bloated sports programs as marketing gimmicks with little evidence that either did much to improve educational quality. Along with raising undergraduate tuition and expanding business programs it rolled out pricey MBA and professional programs to lure degree conscious students to school fearful that without these degrees that would not be competitive. It also realized that for many, high tuition was equated with quality, and simply raised tuition as a way to attract more applications and therefore reject more students, thereby raising its profile in ranking in places such as US News & World Report.

In short, higher education’s new business plan turned into a Ponzi scheme. Trumpeting these gimmicks was the Chronicle of Higher Education, which became the house organ for corporate higher education, offering repeated ideas to sustain the business of higher education that one school after another adopted to stay profitable.

As I argued two years ago in Counterpunch, that plan crashed with the recession of 2008. Students were tapped out in 2008 with college and other personal debt. Students simply could not afford college. The government cut funding for higher education even more, and higher education responded by raising tuition even more. Since 2002, average tuition and fees at private national universities have jumped 144%. Out-of-state tuition and fees at public national universities have risen 171%. In-state tuition and fees at public national universities have grown the most, increasing 211%.

Higher education is back to where it was before WW II—a place for the affluent, white, and elite. Enrollment in higher education has largely stagnated in America, with those from lower income households and persons of color less likely to attend or complete college. Moreover, since 2008 birthrates and college attendance has dropped, forcing colleges to compete for a declining pool of applicants. Since then the pandemic enrollments have continued to slide. Higher education is now stratified from top down, with the elite Ivy Leagues at the top in terms of money and resources. For the rest of the schools, they were less sustainable and the Covid pandemic only hastened their problems. Were it not for pandemic relief, many colleges would have closed by now. In the next few years more will close or be taken over by the corporate survivors.

Biden’s debt relief will help those with student loans. Contrary to neo-liberals such as Larry Summers, this is good. But it does nothing to change the corporatization of higher education. It does nothing to address the cost of higher education, or make it more accessible and more affordable to a greater range of individuals. In fact, I suspect that colleges now have even more of an incentive to raise tuition, telling students that up to $20,000 will be forgiven. Nor does the plan address the issue of helping those who simply do not want to go to college and want to find a good job doing something else. Yes the plan helps many burdened with student loan debt, but it really bails out higher education again


David Schultz is a professor of political science at Hamline University. He is the author of Presidential Swing States: Why Only Ten Matter.

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