In the red

Pub date January 11, 2011
WriterRebecca Bowe

CAREERS AND ED When the University of California Board of Regents met Nov. 17, 2010 to approve an 8 percent tuition hike, roughly 300 UC students who were furious about the decision converged outside the University of California, San Francisco (UCSF) campus at Mission Bay to rally in opposition, some traveling from as far away as Los Angeles.

“We had been organizing with all the campuses to get students to come up because we really wanted to be there to let them know that it’s not what we want, and it’s something they can’t just get away with doing year after year,” said UC Student Association President Claudia Magana. The protests were raucous, and police cracked down by discharging pepper spray and making 13 arrests.

Despite the palpable fury outside and impassioned student opposition delivered to the Regents inside, the 8 percent fee increase was approved. It came on the heels of a 32 percent tuition increase imposed the year before, and the price was ratcheted up by 9 percent and 7 percent in the years prior to that.

The tuition hikes were steep, but hardly new. Indeed, the cost of attending UC schools has been rising steadily for quite a while. According to a study by economist Peter Donohue, student tuition and fees increased 277 percent from 1990-91 to 2008-09, and that was prior to the 40 percent increase that followed. That trend is repeated in rising costs at the California State University and California Community College systems (See “Access Denied,” April 6, 2010).

Student protesters have sought to make it clear that their outrage isn’t rooted in selfish unwillingness to shell out more money, but instead is linked to a broader concern about privatization and the increasingly limited accessibility of public education.

Magana expressed concern that the climbing cost of instruction at UC, though still a relative bargain compared with private institutions, would ultimately start to affect who could and couldn’t attain higher education through the public university system. The question isn’t limited to UC — tuition is increasing at public and private colleges across the board, and as income inequality sharpens, more students seek higher education.

“Students will always pay to be here,” she noted. “The issue is going to be, which students are here? That’s really the big problem — the huge class issue that’s going to come up. Although there are some forms of support for low-income students, it’s not easy.”



Rising costs at UC mirror the upward trend at private nonprofit and for-profit postsecondary institutions nationwide, and those higher prices have triggered a dramatic increase in student borrowing. While students from low- or medium-income families can access higher education at any institution they’re admitted to as long as they’re willing to take out significant sums in student loans, many find themselves at a serious disadvantage once they have to start repaying their debt.

A study conducted by the Public Interest Research Group (PIRG) noted that hefty debt burdens often dissuade graduates from pursuing careers in teaching, social work, the nonprofit sector, or other low-paying occupations that foster social justice. PIRG found that 23 percent of public four-year college grads and 38 percent of private four-year college grads were saddled with too much debt to manage paying back student loans on a starting teacher’s salary.

For students pursuing careers as social workers, the economic bind looked even worse: 37 percent of public school grads and 55 percent of private school grads with student loans wouldn’t be able to manage repayment with starting salaries in that field, the study concluded.

“Because students with lower incomes are more dependent on student loans than higher income students, students who already face significant challenges to attending college will more strongly feel the effect of loan debt on career choice,” the report points out.

“It’s a serious problem for so many young people to be starting out their working life so deep in debt,” said Edie Irons, spokesperson for The Institute on College Access and Success (TICAS), an Oakland-based research organization. “It really does limit people’s ability to take advantage of the opportunities education is supposed to provide. In concrete terms, it can make it really hard to buy a house, or start a business, or start a family, or go back to grad school, or to save for retirement or your own children’s education. And that’s all assuming you can keep up with the payments.”

Student loan debt has intensified over the past two decades. In 1993, just one third of all four-year college students graduated with debt, owing on average slightly more than $9,000, according to PIRG.

Today, the majority of college students take out loans to finance their education. Around 62 percent of public university students graduate with student loans, as do 72 percent of students attending private nonprofit institutions, and 96 percent of students attending for-profit institutions such as the University of Phoenix or the Academy of Art University, according to TICAS. Nationally, students graduate owing an average of $24,000, not counting debt associated with advanced degrees.

While young people must invest more than ever before to obtain higher education, the return on investment isn’t showing signs of improvement. The expected median income for UC graduates has stayed the same over the last decade, even as the cost of tuition has ballooned.

What’s more, says Bob Meister, president of the Council of UC Faculty Associations and professor of Political and Social Thought at UC Santa Cruz, is that an estimated 40 percent of public university students entering the workforce will either be unable to find a job, or will land in a lower-paying job that doesn’t require a college degree.

“For college graduates under 25, the unemployment rate is nearly as high as the national unemployment rate,” around 10 percent, Meister notes. “Over the past decade, what’s happened is that the median hasn’t risen. The top has risen very fast, and the bottom has fallen.”



There’s no doubt that diminished state funding is affecting California’s public universities.

“A lot of departments are being eliminated, and a lot of professors who are really amazing are leaving to other universities,” Magana says. “And the waiting lists for classes are just ridiculous.” Academic goals are being compromised — for example, students had to abandon their push for an ethnic studies program at UCSC, she added, because the American studies department that would have partially supported it was slashed.

While diminished public funding has been used to explain the need to raise tuition, Meister has published numerous essays suggesting that the root cause of rising tuition costs at UC goes deeper than that, and he has gone so far as to publicly encourage students not to accept higher tuition without first demanding financial information.

Meister previously served on the UC budget committee and has observed the institution’s evolving financial policies for years. He doesn’t seem surprised that tuition is going up, regardless of what condition the economy is in or what amount of public funding is available because, as he puts it, “the universities will cost as much as they can.” UC had long sought to boost revenue by raising tuition, he noted, yet its leaders feared a rollback in state funding in response. But that changed under Gov. Arnold Schwarzenegger, who agreed to increase state support only on condition of that UC in turn require students to contribute more.

Around the same time that Schwarzenegger provided this new incentive to raise tuition, UC pooled its various revenue streams into a consolidated general revenue fund, Meister said, a departure from the old way of keeping separate accounts. This new fund, which included all non-state revenue and funding that wasn’t legally required to be used for certain purposes, could be pledged entirely as collateral for bonds for new construction projects, greatly increasing the institution’s borrowing power and boosting its revenue with the addition of new facilities.

To maintain its stellar bond rating, UC had to ensure an increase in revenues, according to Meister’s explanation, and to do that, UC ratcheted up the one source of revenue it had full control over: tuition. Meister laid bare this financial play in a 2009 open letter to students, titled “They Pledged Your Tuition.” Since it was published, a small corps of student activists has become deeply engaged in studying campus finance documents and airing criticism of financial policies.

Just before the Nov. 17 protests at UCSF Mission Bay, Meister published another open letter, this one addressed to UC President Mark Yudof. This one contemplated, “Why they think they can increase revenues regardless of how fast the economy grows … and regardless of whether the income of graduates is stagnant.”

His answer is somewhat surprising: “Their ability to raise tuition is a function of the growth of income inequality,” he told the Guardian. In the letter, Meister charges, “In the 21st century, when almost all income growth has been in the top 1 to 2 percent of California’s population, UC is still marketing income inequality to students as its most important product. It now expects all students to pay more for an ever-shrinking chance of reaping the ever-growing rewards that our economy makes available to the few. Your plan to increase revenue through tuition growth is feasible, of course, only because the federal government still allows students to borrow more for education despite the greater likelihood that they will not be able to repay — student loans may be the last form of subprime credit available in our economy.”

His theory highlights a paradox. “Being in the have-not category is increasingly worse,” he explains, “and so they are willing to take on more debt, which actually dampens their prospects for income growth.”

The question now is what will happen under Gov. Jerry Brown, who is likely to take a different stance toward rising tuition than Schwarzenegger but nonetheless is expected to unveil harsh cuts to education as a way to address a $26 billion budget deficit.

In a recent interview with the San Francisco Chronicle, UC Regent Richard Blum indicated that it probably would not be feasible to raise tuition again, so the message was that students should brace for more cuts to education.

When Brown unveiled his proposed budget on Jan. 10, he announced further cuts to higher education in California to balance the state budget. Brown’s revised 2010-11 budget decreases the state funding for UC, CSU, the community college system, and other higher education programs by $1.7 billion for the 2011-12 budget. The UC system would take a 13.3 percent hit in general fund support; the proposed cut to the CSU system is 12.5 percent; and the community college system would be cut by 6.9 percent.

Brown, who also wants to hold a special election to ask voters to maintain the current level of tax rates for income, sales, and vehicle license taxes for five years rather than let them expire later this year, expressed regret about making cuts to higher education. But he emphasized the need to make tough decisions in the face of a bleak financial outlook, saying, “We need to face the music.”