Washington Monthly - September/October 2020 - 35

rent market, but still intense enough that colleges would need
to work hard to sustain enrollment. Some might choose to specialize in the academic disciplines where they have the most
strength and depth. They would also build reputations for expertise in particular approaches to pedagogy. Students would
choose to live in communities that fit their needs, faiths, backgrounds, and ideological affinities, while enjoying access to
courses and peers nationwide.
The end result would be a new network of affordable, wellresourced, deeply interconnected colleges and universities that
combine the virtues of traditional higher education diversity
and autonomy with consumer protection, information technology, and cutting-edge education practice. Instead of letting
some colleges collapse into bankruptcy while the rest struggle
and claw in a failed system of free market chaos and declining
public support, some of the most vital and distinctly American
institutions in our nation's history would be repositioned for
even greater success.

ot all colleges would join the network. Some might prefer autonomy, as is their right. For others, the numbers
simply wouldn't add up. The annual subsidy and uniform price schedule would yield much less revenue than they
receive in tuition today. For the most part, these are extremely wealthy universities that enroll mostly wealthy students-
the Ivy-plus universities, fancy liberal arts colleges, and a relatively small number of elite public research universities. The
winners who took all over the past 50 years.
This plan would not, in other words, tear down the system
of elite colleges and universities that currently serves to acculturate and accelerate the children of the ruling class. As long as
people are allowed to be very rich, there will be places like this,
just like there will always be mansions and expensive cars. And
in fairness to Stanford, Yale, Duke, and other universities that
sell status to the highest bidder through a thinly veiled system
of bribes and legacy admissions preferences, these universities
truly are some of the greatest centers of research and scholarship on the planet. They should keep being excellent at that,
which helps all people, not just the privileged.
This does not mean, however, that the public should continue subsidizing them in the same way.
The "nonprofit" institutions most likely to opt out of the
new network are the same universities that hold the lion's share
of all university endowment assets, totaling hundreds of billions of dollars. In 2017, Congress passed a small 1.4 percent excise tax on endowments larger than $500,000 per student. The
higher education lobby, incensed, has been fighting to repeal it
ever since.
But the real money isn't in the taxes colleges don't pay on
their endowment earnings. It's in the income taxes individuals
don't pay on their donations to colleges, which are effectively
subsidized at nearly 40 percent for the wealthiest donors, and
thus provide an incentive to donate much more.
The cost of the new plan would be partly offset by eliminating the tax deductibility of any donations to colleges with an

endowment greater than $200,000 per student. If colleges want
to avoid the penalty, they can spend down their assets by making tuition cheaper for more students. There is no reason taxpayers should heavily subsidize millionaires who give money to
billion-dollar institutions.

Every college in this new
network would be required
to accept credits from every
other college in the network.
This would inspire colleges
to improve their online
technological tools and
pedagogical skills, and to
cooperate and specialize.
The U.S. Department of Education should also impose
much stricter borrowing standards on colleges for loans used
for education outside of the network, including at for-profit
colleges. The current loan system runs on autopilot-anyone
can borrow to enroll in any program at any accredited college.
The new system would put the burden of proof on colleges, and
require them to share in the risk. Eligibility for federal loans
would be restricted to individual college programs that consistently graduate students who are able to get good jobs and pay
their loans back. If students default, the college would have to
reimburse taxpayers for 50 percent of the loss.

he existing higher education policy architecture has
been in place for so long, it can be hard to imagine
something fundamentally different. But while the
ideals of learning and scholarship are eternal, the means by
which we organize and pay for higher education have changed
many times in the past. It's time to change them again.
Relying on state governments to ensure that colleges have
enough money and on the free market to ensure that colleges
are well run, while the federal government stands in the background passively lending students enormous sums of money
that many will never pay back, has failed. That approach would
have kept failing in the best of times and will be an unmitigated
catastrophe in these, the worst of times.
The moment has come to finally give all students, not
just the elite few, a great, affordable college education, without life-shattering financial stress and anxiety. And it's time
for colleges to work together, rather than standing and
dying alone.
Kevin Carey directs the education policy program at New America.
Washington Monthly 35

Washington Monthly - September/October 2020

Table of Contents for the Digital Edition of Washington Monthly - September/October 2020