Do We Need Federal Regulation of Higher Education Tuition?
In a recent post on The Volokh Conspiracy, Professor Steven Calabresi proposes the creation of a federal commission with the power to invalidate college tuition increases beyond the cost of general inflation. In today's essay, I agree with some of the points that lead Professor Calabresi to offer this proposal, question more of them, and ultimately disagree with the recommendation.
As a preliminary matter, it is refreshing to be able to engage with a usefully thought-provoking essay by Professor Calabresi. For nearly all of my academic career, I have regarded Calabresi as a principled conservative with whom I could and did often respectfully disagree. In recent months, however, he has authored a number of blog posts that suggested he had become, for lack of a better term, a Trumpist hack, even using the lingo of "witch hunt" and engaging in absurd hyperbole with statements like "Justice Thomas . . . is actually the best justice ever to serve on the Supreme Court in 234 years of American history." As I explain below, this week's essay by Calabresi includes a few obviously false assertions but is generally measured in tone while tackling a genuinely important issue. I hope it portends a broader return to Calabresi's prior form.
Now onto the diagnosis and prescription. Calabresi makes the following claims: (1) Biden administration programs for student debt relief violate the Constitution's Appropriations Clause because Congress did not appropriate money for them; (2) student debt relief "seems unfair to those who have been paying student loan debt or who never borrowed money in the first place"; (3) "college tuition, which costs more than $100,000 a year, is unaffordable by 99% of the American people"; and (4) tuition inflation is driven by administrative bloat. Thus, he proposes (5) creating a federal commission with power to approve or disapprove tuition increases beyond general inflation, modeled on Interstate Commerce Commission rate regulation of railroads beginning in the late 19th century.
Let's consider each of Calabresi's claims and his proposal in turn.
1) Constitutionality. Calabresi says that SCOTUS found a Biden administration debt forgiveness plan "unlawful" in Biden v. Nebraska. That's true. But Calabresi also seems to imply that it did so because it thought the plan unconstitutional, which is false. The Court held that the administration had exceeded the statutory authority on which it relied. That's why the administration has gone back to the drawing board to formulate a plan relying on other statutory authority. That too could be held invalid, but if so, it will again be on statutory grounds.
I shouldn't too hastily accuse Calabresi of making such an elementary error, so let's assume that he doesn't mean to attribute to Biden v. Nebraska any constitutional holding. He himself, however, clearly offers a constitutional argument. He says that executive action to provide relief from student debt violates the Appropriations Clause. He writes: "President Biden has continued his unlawful attempts to spend money without an appropriation from Congress, an appropriation that is required under Article I, Section 9 of the Constitution."
Calabresi is confused. If an executive program of student debt forgiveness exceeds the delegation of authority from Congress, then it's unlawful, but not because Congress failed to make an appropriation. To see why, suppose that the President or some Cabinet Secretary were to utilize some debt forgiveness authority that Congress has clearly provided. In Biden v. Nebraska and other cases, the Court has recognized that (subject only to the constraints of the nondelegation doctrine), Congress can give and often has given the executive some authority to forgive debt. However, the laws doing so do not contain appropriations. So if Calabresi is right that the Biden programs violate the Appropriations Clause, then so does every program of executive-granted debt relief, no matter how clearly authorized by Congress.
As a matter of economics, of course, there’s no substantive difference between the government paying someone $10,000 (an expenditure) and failing to collect $10,000 from someone who owes it (forbearance), but constitutionally there is a big difference. If Calabresi is right that executive forbearance in debt collection is an unconstitutional expenditure, then so, it would seem, are all IRS policies that fail to collect every penny owed in taxes. That's plainly wrong. The real questions concern the scope of delegated authority. The Appropriations Clause is a red herring.
2) Policy. I agree with Calabresi that any program of student debt forgiveness raises equity questions, not just between those who receive relief and people who repaid in full or never borrowed for college, but also as to people who didn't attend college and didn't have loans available to them for their endeavors (such as starting a small business). There is a real worry that student debt relief is regressive on net. The Biden programs have been deliberately structured in ways to reduce that problem by targeting the least well-off debtors, but they are not beyond criticism on policy grounds.
I also agree with Calabresi that it would be better for Congress to make the policy choices--although I suspect that my policy druthers would be more in the direction of leveling up than his would be. Further, even though I would have preferred to see Congress provide debt relief, that doesn't mean I think the Court was right in Biden v. Nebraska to invalidate the first Biden plan. I thought the Court should have dismissed on standing grounds. On the merits, I don't like what the Court did there and in other recent cases invoking the newly invigorated major questions doctrine.
3) College affordability. It's unfortunate that Calabresi feels the need to resort to hyperbole, because college affordability is indeed a serious issue. Let's begin with his made-up numbers, though. Calabresi says college tuition "costs more than $100,000 a year." That's just false.
According to a May report, the most expensive college in America in 2024 is Pepperdine, where "annual cost of attendance is approaching $100,000" ($95,225 to be exact). But that's: (a) the cost of attendance, which includes room, board, and fees as well as tuition; (b) at the country's most expensive college; and (c) without taking any account of grants of financial aid, which at Pepperdine, according to the same article, average over $43,000. Thus, the average actual cost of attendance at the country's most expensive college is about $52,000, with tuition making up only part of that. In other words, Calabresi's $100,000 figure more than doubles the country's most expensive college.
Meanwhile, there are relative bargains out there--especially for students attending state universities in their home state. UC-Berkeley, which is arguably the best public university in the country and one of the best universities, full stop, charged in-state tuition and fees totaling $15,891 last academic year. Other elite state universities are comparable. Of course, most aspiring college students lack the credentials to attend Berkeley, UCLA, the University of Michigan at Ann Arbor, or the University of Virginia, but that's not a matter of cost. Tuition at a good but not best-in-state public university is typically about the same as at the state's flagship campus.
Calabresi's further claim that "99% of the American people" can't afford college tuition might be true if it were also true that tuition costs were as high as his invented $100,000 figure (and there were no financial aid), but because they aren't (and there is financial aid), the further claim is also false. According to the most recent available data from the Bureau of Labor Statistics, over 60% of high school graduates attend college, not the 1% Calabresi believes can afford to.
None of this is to deny that there is an affordability crisis in higher education, fueled by the fact that the cost of college has increased at a much faster rate than overall inflation. However, a serious discussion of the problem would begin with accurate data.
4) Drivers of higher education inflation. Google "administrative bloat in higher education" and you will find dozens of articles. The responsible ones recognize three basic facts: (a) administrative costs relative to direct educational costs have grown in recent decades; (b) at least some portion of that growth reflects a lack of oversight and what we might fairly call nest feathering by administrators, especially those in the higher echelons of the administration; but (c) much of the growth resulted from the recognition that colleges need to provide services that they did not provide, or provided in much more rudimentary form, decades ago.
On point (c), consider a few changes since when I entered college in 1982, armed with a Smith Corona manual typewriter on which to type up my assignments after writing drafts by hand. IT departments have necessarily ballooned. Career services offices are now rightly understood as essential. Whole bureaucracies are needed to administer disability accommodations. Other bureaucracies are needed to investigate, prosecute, and adjudicate violations of disciplinary codes, most of which have features mandated by the Department of Education in its oversight of Title VI and Title IX. And academic institutions also properly have infrastructure aimed at helping students with mental health issues. All of these tasks require personnel, which indeed adds to the cost of running an academic institution. It's one thing to lament the growth in the number of non-instructor personnel; it's harder to propose cuts that don't affect a college's ability to address student needs.
Calabresi also doesn't account for some of the other drivers of college cost inflation. These include reduced government support. In addition, colleges engage in a kind of price discrimination, as the Pepperdine numbers I noted above indicate. Students from the wealthiest families pay the full sticker price, which effectively subsidizes deep discounts for students given financial aid in the form of grants. Many of those grant recipients would not otherwise be able to afford to attend. Unfortunately, many colleges also give out grants for athletic scholarships and merit scholarships to students who do not necessarily have financial need, leaving less money available for those with greater need.
These are longstanding issues in the academy that are more complicated than Calabresi acknowledges.
5) Tuition Commission. Calabresi's proposed tuition commission is a non-starter. Rate regulation makes sense in monopolistic or oligipolistic markets, but there are thousands of four-year colleges in the United States. I would have expected something more like a proposal for greater transparency to foster price competition.
Calabresi's proposal contains very few details, but even those listed are odd. For example, effective regulation would look at actual cost, not sticker price. Meanwhile, because the proposal regulates increases in tuition rather than tuition itself, it would lock in existing disparities. I could go on, but the commission suggestion doesn't strike me as serious.
Why, then, have I devoted an entire blog post of my own to critiquing an unserious proposal based on a number of plainly false assumptions? Because at the end of the day Calabresi is right to have identified a critical issue. Student debt is a problem that could be solved for some existing debtors through debt relief. But the root of the problem--and the reason why debt relief is only a temporary fix for people who have already been to college--is higher education cost inflation. Calabresi's commission isn't the right solution, but I applaud him for looking for one.