The “Gentrification” of Pennsylvania’s Fourteen PASSHE
Universities
The 14 PASSHE universities include Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock and West Chester.
By way of clarification, the Centers for Disease Control and Prevention
(CDC) offer the following definition¹ of “gentrification” as it applies to the
challenge of providing health care to various communities:
“Gentrification is often defined as the transformation of neighborhoods
from low value to high value. This change has the potential to cause
displacement of long-time residents and businesses. Displacement happens when
long-time or original neighborhood residents move from a gentrified area
because of higher rents, mortgages, and property taxes.”
Although the term “gentrification” is not often applied to public higher education, there is compelling evidence to show that a definition similar to the CDC definition applies to Pennsylvania’s fourteen PASSHE universities—as far as Pennsylvania’s challenge of providing public higher education to its communities.
The conspicuous affluence of Pennsylvania families that are increasingly sending their sons and daughters to PASSHE universities reveals gentrification tendencies similar to those outlined in the CDC definition.
As our data will show, PASSHE’s gentrification now poses obstacles to students from Pennsylvania’s least affluent families being able to receive the opportunities and benefits of a public higher education—and these are the very students for whom public higher was created in Pennsylvania, and across America.
In making the case for this assertion, recall Chart 21 and its caption² referenced in last week’s blog post:
“Chart
21. Family Income Distributions of
Financial Aid Recipients at Cal U. These
data show that the family income data for Cal U students shifted substantially
between 2002 and 2011. The percentage of
students from families with incomes over $100,000 per year almost tripled
(2.86) during that time. The percentage
of students from families making between $70,000 and $99,999 grew by 21%. At the same time, the percentage of students
from families making between $40,000 and $69,999 fell by 22%. And the percentage of students from families
making less than $40,000 fell by 13%.”
“These data demonstrate a huge shift
to students from wealthier families.”
While the above paragraph recounts a shocking ten-year shift from less affluent families to more affluent families sending their sons and daughters to PASSHE universities, it is even more striking when one looks at the average family incomes associated with the four income quartile ranges just cited. As shown³ in Chart 17, the average family income for those families earning less than $40,000 per year was $17,863; the average family income for those families earning between $40,000 and $69,999 per year was $54,817; the average family income for those families earning between $70,000 and $99,999 per year was $83,816; and the average family income for those families earning more than $100,000 per year was $135,677!
In 2014, Pennsylvania ranked 23rd nationally in terms of its median household income ($50,228). The U.S. average that year was slightly higher at $50,502.
PASSHE students from the most affluent
families have incomes almost three times larger than PA median family income,
and their share of enrollment tripled (5.4% to 15.5%) in a recent ten-year
period.
“Price is what you pay and value is what you get.”
Warren Buffett
At its most basic level, the purchase of a
public higher education is a voluntary transaction involving both the “price”
and perceived “value” of the education received.
As noted last week, most students and parents looking at colleges today quickly become aware of the critical difference between tuition, i.e., the sticker price, and bottom line, i.e. the actual cost to them.
How Private Colleges Handle Sticker Price vs. Bottom
Line
Private colleges and universities have been
practicing income distribution for years by means of a tool known as “tuition
discounting,” touted to the best applicants (e.g., students with higher SAT
scores but lower family income) not as a “discount” but as a “scholarship” or
“institutional grant.”
Call it what you will, but it remains a tuition discount since it is only offered to those academically qualified students needing a financial inducement to attend a school whose tuition is otherwise totally out of reach.
One consequence of this admissions policy, familiar at most private colleges and universities in America, is that qualified students from more affluent families are expected, and needed, to pay the full sticker price.
In order for a tuition-discount policy to work without bankrupting the institution, the sticker price paid by students not receiving a discount must be high enough to compensate for the discounts to be provided.
Therefore the annual sticker price must be higher—and in some cases much higher—than the actual average cost of one-year’s attendance for one student.
How Public
Universities Handle Sticker Price and Bottom Line
Public universities in America have tended to pursue two different policy directions, with the choice determined by the level of taxpayer-subsidy each state is willing to provide to “public higher education.”
As shown previously in national data⁴ from the State Higher Education Executive Officers Association (SHEEO), some states provide as much as 85% of the cost of public higher education (with net tuition providing 15%), while other states provide as little as 15% of the cost, with net tuition providing 85%.
The average net tuition across the fifty states in 2014 was 47.1%, a figure that has been growing by one percent per year for the last twenty-five years! If this trend continues, public higher education, i.e., highly State-subsidized higher education in America, will disappear entirely in one or at most two generations.
How
Pennsylvania Handles Sticker Price and Bottom Line
As shown in previous blog posts, PASSHE policy makers have focused on maintaining the lowest possible tuition—i.e., sticker price—rather than the “lowest possible cost to the students,”—i.e., bottom line, as mandated by Act 188. When combined with three decades of steadily shrinking State Appropriation to the fourteen PASSHE universities, the political focus on lowest possible tuition means that there is little or no money left over to provide tuition discounts to students from Pennsylvania’s least affluent families.
The
Displacement of PASSHE Students from Pennsylvania’s Least-Affluent Families
For students from Pennsylvania’s less affluent families, PASSHE tuition—without a large discount—is seen as incredibly high! This causes their share of PASSHE’s enrollment to trend sharply downward.
But for students from Pennsylvania’s more affluent families, PASSHE’s tuition is seen as incredibly low, even without a discount. To them, PASSHE’s sticker price is an incredible, State-subsidized bargain!
By welcoming more affluent students while discouraging less affluent students, PASSHE’s gentrification policy is reflecting disgraceful decisions by the PASSHE Board of Governors that are in direct violation of the statutory purpose of the PASSHE universities as mandated by its Act 188 enabling legislation.
To be continued.
¹ http://www.cdc.gov/healthyplaces/healthtopics/gentrification.htm.
² https://www.keepandshare.com/doc/7971151/privatization-without-a-plan-chart-21-and-caption-march-26-2016-pdf-191k.
³ https://www.keepandshare.com/doc/8008009/privatization-without-a-plan-chart-17-and-caption-april-3-2016-pdf-193k.
⁴ http://www.sheeo.org/sites/default/files/Figure%209.jpg.
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