College vs. Unemployment: Expanding Access to Higher Education Is the Smart Investment During Economic Downturns

In forming a strategy to deal with the severe economic downturn, President-elect Obama and his evolving brain trust of economic advisers should recall the largely successful and innovative efforts by the federal and state governments to avoid a projected steep post–World War II recession – in particular, the key role of higher education. Demand for higher education generally goes up during economic downturns. Expanding higher education funding and enrollment capacity may be as important as any other policy lever to cope with an economic downturn, including funding for infrastructure. Yet most state and local governments are in the midst of wholesale cutting of their budgets. Some 75 percent of all students in the US are in public institutions. Feeling the effects of repeated cuts in budgets, many multicampus public systems are threatening to cap enrollment despite growing demand. Would it be smart to constrict access to higher education just when unemployment rates are potentially peaking? An exploratory Commission on Higher Education, not unlike what President Harry Truman formed in 1946, but with more urgency and possibly an initial budget, might provide a larger vision and contemplate a range of options. Short-term and immediate policies could include significant directed subsidization via state governments of the public higher education sectors; a large increase in federal Pell Grants for low-income students, already severely under-funded relative to demand; greatly expanded resources for direct loans; the possibility of a one-time grant for middle-income students to attend a participating public or accredited private institution; for some targeted age groups, federal unemployment compensation could be tied to enrollment access to an accredited higher education institution; and support of public college and university building programs as part of any new infrastructure investment program. Long-term goals should include an assessment of the overall health of the U.S.’s still famous, but strained, higher education system and what national and state goals might be conjured. Globally, those nations that resort to uncoordinated and reactionary cutting of funding, and reductions in access, will find themselves at a disadvantage for dealing with impact of the worldwide recession, and will lose ground in the race to develop human capital suitable for the modern era.