American Civility

Nationalization is a contagion that just won’t go away.  Just when we thought our children were safe from central planners, Secretary of Education Arne Duncan proposes taking over all college loans from the private sector in an article¹, “Banks Don't Belong in the Student Loan Business”, to which the instinctive response is: why not?  Aren’t banks for lending?  The argument proffered by the Secretary is in the subtitle to the article: “They [banks] get billions in federal subsides that can provide financial aid to needy students.”  Duncan’s “… real aim is to simply stop using banks as the middle man for student loans.”  One doesn’t know which is more startling—the conclusion that middle men who provide service for a fee should be wiped out by a government intent on communizing every facet of economic activity or the admission by a department secretary that government should not provide subsidies.

What Duncan and most government officials fail to see is that Washington is the real middle man: a dollar taken from a taxpayer in California becomes less than a dollar when paid to a taxpayer in Arkansas by the amount of the Federal government’s “processing fee”—its expenditure and borrowing costs.  In the case of the Department of Education (ED) this is $70 billion plus interest plus annual escalation.  Add to this the estimated $87 billion in the student loan subsidy ED will distribute over the next ten years and soon it adds up to real money.

All of which raises the rebuttal that ought to be put to Duncan: Government does not belong in education business.  Since ED was first established under President Carter, the United States has made no progress vis-à-vis other advanced societies.  A 2004 OECD study² showed we outspend all countries except Austria, and yet our literacy performance for that age is still below 12 industrialized countries.

Nor is the problem all in Washington.  The current system of funding education with property tax funds shows no objective merit.  I compared total state spending on education with SAT scores and participation rates, ranging from 90% in Maine to 3% in South Dakota.  Correlations are negative between the combined SAT score and per capita state education spending or per capita property taxes and mildly positive between participation and spending or taxes³.  In other words the high tax, high spending states can lead the student to the test, but they cannot assure good scores.  One may argue it is good more students are applying to college in those profligate states.  But scores over a ten year period have dropped nationally four points in critical reading while rising only four points in math, with the poorest results in high cost states; the worst being Maine which dropped 39 points in reading and 36 points in math in that ten year period.

The No Child Left Behind Act of 2001 apparently left some children behind.  A study by the National Bureau for Economic Research⁴ showed that whereas math scores improved in the 4^th and 8^th grades after the Act, reading scores did not. 

Private schools, however, consistently show better results.  ED’s own National Center for Education Statistics concluded, “In grades 4 and 8 for both reading and mathematics, students in private schools achieved at higher levels than students in public schools.” ⁵  So why are we still clinging to the public school?

A precondition to achieving the best education necessary to preserve and promote our precious liberties and economic growth is a challenge to basic assumptions:

1. Embedded and automatic increases in elementary and secondary school budgets resulting from rising property assessments diminish accountability and hinder improvements in student performance.  Parents ought to be allowed the freedom to pay directly for the school of their choice without being penalized by paying a tax and a tuition.
2. If we subsidize economic activity, it becomes more expensive.  Therefore, to arrest the increase in college education costs, we should stop subsidizing it.
3. If we expect less from our children, we will get less.  Government’s sole role ought to be to set standards for excellence, and this should be and can be achieved by volunteers at no cost to taxpayers.

The average per pupil cost for students K-12 nationally is almost $9000 yearly⁶, while the average private education costs $8400.  Making education private, closing ED, and ending the property tax financing of public education, makes both economic and educational sense.

Also appears on Examiner

 

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[1] Duncan, Arne. “Banks Don't Belong in the Student Loan Business.”  The Wall Street Journal, 17 Dec. 2009, http://online.wsj.com/article/SB10001424052748703514404574588751838773352.html

[2] Raising the quality of educational performance at school.” Organisation for Economic Co-operation and Development, 2004, http://www.oecd.org/dataoecd/17/8/29472036.pdf

[3] -0.39 between combined reading, math, and writing SAT scores and per capita state education spending and -0.27 between the combined score and per capita property taxes; 0.60 between participation in the SAT tests and per capita spending and 0.50 between participation and per capita property taxes.  Statistical correlations range from -1 (perfect negative correlation) to +1 (perfect positive correlation) with 0 signifying no correlation.

[4] Dee, Thomas., Jacob, Brian. “The Impact of No Child Left Behind on Student Achievement.” The National Bureau of Economic Research, November 2009, http://www.nber.org/papers/w15531

[5] Braun, Henry., Jenkins, Frank., Grigg, Wendy. “Comparing Private Schools and Public Schools Using Hierarchical Linear Modeling.” July 2006 National Center for Education Statistics, http://nces.ed.gov/nationsreportcard/pubs/studies/2006461.asp

[6] U.S. Department of Education, http://www.ed.gov/about/offices/list/oii/nonpublic/statistics.html and http://www.ed.gov/about/overview/fed/10facts/edlite-chart.html#2

 

Other sources:

”Mean SAT Critical Reading, Mathematics and Writing Scores by State, with Changes for Selected Years.” The College Board, http://professionals.collegeboard.com/profdownload/cbs-2009-Table-3_Mean-SAT-CR-MATH-and-Writing-Scores-by-State.pdf

“Median Household Income (In 2008 Inflation-Adjusted Dollars)
Universe: Households.” US Census Bureau, http://factfinder.census.gov/servlet/GRTTable?_bm=y&-_box_head_nbr=R1901&-ds_name=ACS_2008_1YR_G00_&-_lang=en&-format=US-30&-CONTEXT=grt

“2006 Public Elementary-Secondary Education Finance Data.” U.S. Census Bureau, http://www.census.gov/govs/www/school06.html

“State and Local Property Tax Collections Per Capita by State, Fiscal Year 2007.” Tax Foundation, October 2009, http://www.taxfoundation.org/taxdata/show/251.html