Business has big stake in higher ed battle

November 26, 2003 – If your children’s college tuition has gone up this year, blame business. The administration and congressional Republicans are attacking higher education to avoid providing that sector more money, and business, which benefits from a strong educational system, isn’t doing anything about it.

That may sound harsh, but hear me out. For companies, higher education contributes to innovation, technological pre-eminence and job and income growth – just what the U.S. economy and business need.

However, colleges and universities find themselves under assault after the steepest jump in tuition at public institutions in three decades. The College Board says the 14-percent increase over the previous year reflects the need by schools to make up for recession-caused state funding cuts and the long-term erosion of overall support.

All of this has left the public seething and looking for someone to blame.

The price increases couldn’t come at a worse time. Congress is working to renew the Higher Education Act, which provides more than $60 billion in federal loans and grants to students. The deep federal deficits make boosting federal aid problematic, and that has made Hill Republicans and the White House even edgier about political fallout from this year’s sticker shock as they head into next year’s elections.

To deflect blame, the Republicans are taking the offensive. A House panel recently issued a report lambasting institutions for making higher education unaffordable, and Rep. Howard “Buck” McKeon (Calif.) has introduced legislation that would impose price controls by withholding federal money from schools that raise tuition and fees much faster than inflation. More ominously, the White House is weighing seriously mounting its own attack on public colleges and universities. The Chronicle of Higher Education reports that President Bush wants to blame them for the high costs and for not providing a quality education.

As Thomas M. Macon, chairman of Grantham University, one of the nation’s largest online schools, put it, “The reauthorization of the Higher Ed Act is being politicized.” That’s the worst way to make policy and deal thoughtfully with higher education’s needs and problems.

Who can end these games? Given their tight ties with the Republicans, business leaders are the only group that can tell the White House and its congressional allies to stop demagoguing the issue and develop serious solutions.

Will they do that? It’s questionable. Corporate America traditionally has defined its interests narrowly. “The attitude of business leaders is that [higher education] isn’t our issue,” an observer of the business-and-higher-education relationship told me.

That’s a shortsighted view. “Whether you’re talking about old economy, new economy or something in between, for decades we’ve depended on a consistent flow of educated people to move forward,” said Jared Bernstein, senior economist at the Economic Policy Institute. “One of the great inputs into our economy is college-educated workers.”

Bernstein said the data demonstrate that higher education contributes to business’s well-being. Over the past 25 years, the share of college-educated workers has doubled from 15 to 30 percent. Their typical unemployment rate has been in the 1- to 2-percent range. “That shows how our economy absorbs these workers and how critical they are to our productivity and technological gain,” he said.

Moreover, labor economists have found that workers generally get a 7-percent increase in income for each additional year of schooling they have beyond high school. “This obviously provides a huge boost to consumption and to growth,” Bernstein said.

College and university presidents are partly to blame for the pickle they’re in. “We come in contact with the business world on policy issues, but there’s not an established linkage,” said a university lobbyist. But it’s the insular business outlook that’s worse. Said an observer, “Business hasn’t made the translation yet about the direct impact downstream that an administration attack on higher education could mean for it.”

Washington’s power constellation puts the responsibility on business to be the voice of reason.

“The pressure of the ‘free-lunch bunch’ to reduce the public commitment to higher education is destructive of helping people move ahead,” warned John “Til” Hazel, a highly respected Virginia business leader who has led the fight to adequately fund his state’s colleges and universities.

Until business leaders push for adequate resources, they will indeed share the blame for the higher-education mess.