Transcript: Trump Is Destroying Higher Ed. Here’s How To Rebuild It

This is a lightly edited transcript of the January 16 edition of Right Now With Perry Bacon. You can watch the video here or by following this show on YouTube or Substack.

Perry Bacon: Marshall Steinbaum is an economist at the University of Utah. He’s a fellow at the Jain Family Institute. If you have a Twitter account, overall he’s just a very smart guy who has a lot of interesting insights—mostly about economics, some about higher education—but just somebody I’ve enjoyed following and reading. So, Marshall, thanks for joining.

Marshall Steinbaum: Great to be here. Thanks for having me. That’s a very flattering introduction.

Bacon: What I want to get into today is that you co-wrote a memo—a proposal—70 pages long. I’m trying to think of the right way to describe it. Anyway, it was co-written by you and a fellow named Andrew Elrod, and it’s a look at what higher-education policy should be. The title is Rebuilding American Higher Education: From an Engine of Inequality to a Pillar of the Public Interest.

The reason I was so interested in this is that we’re having a higher-education discourse in which the Republican Party and the Trump administration are very opposed to college and higher education as we know it—it’s too liberal, it’s too woke, whatever words they use. But if you listen carefully, a lot of their criticisms are shared by what I would call centrist Democrats, for now. In more polite language, they say colleges are wrong, colleges are too elite, colleges are too radical, and so on. And you, of course, saw the repression on campuses that happened when Joe Biden was president.

So I think there is a critique of higher education on the right, and there’s a critique on the center-left that are different versions of the same thing. And what you bring is a different critique of higher education, with different solutions. So I want to start there. In your view, what are the main problems of American higher education?

Steinbaum: So I think it all comes down to the phrase institutional stratification and segregation. And that is on all sorts of dimensions, like income and wealth as well as race and ethnicity and nativity, for that matter.

Basically, what we have now in this country is a higher education system that consists of heterogeneous institutions that each enroll homogeneous student bodies. And what was different in the past is we had at least a more egalitarian system where you had more homogeneous institutions relative to now, enrolling a more heterogeneous student body.

So in economics terms, I call that a pooling equilibrium that has collapsed to a separating equilibrium by means of cream skimming. That is to say, due to the privatization and plutocratic takeover of higher education, institutions are increasingly trying to pick and choose their students for getting the maximum ability to pay so they can charge the highest tuition.

For public institutions, that typically means trying to recruit—or I should say for public flagship institutions, that means trying to recruit across state lines, enroll out-of-state students because they’re worried about a budget model that relies too much on state appropriations.

There have been some cuts, although I think the degree to which there’s been austerity in higher education is actually somewhat overstated in the discourse. There’s certainly been austerity in some sectors and some reaches of higher education, but it’s really what is being funded as opposed to the amount of funding.

And the institutions that we have are trying to accommodate themselves to this world where there’s less public funding available or it’s key to different programming that the institutions put together. And instead they’re trying to reach out and get the students that come with the dollars that they think will keep the doors open.

And that means basically whereas there used to be a place in the public systems for a variety of different students, each of them able to access a high quality of education, now it’s more like where you start in life dictates the type of institution they are going to have access to. And that’s behind a lot of the public dissatisfaction and loss of trust in the higher education system that isn’t articulated by the elites either of the right or of the center left as you described to begin with.

Bacon: OK, let me say this in super-simple terms. Community colleges and non-flagship institutions often enroll a lot of lower-income students and a lot of students of color.

Then you have flagship schools—say, the University of Michigan at the high end, but even places like the University of Alabama—these more elite, publicly funded state schools that are trying to enroll higher-income students. They tend to have whiter student populations who can pay their way, and they even recruit out of state.

Then you have the Harvards and Dartmouths, which of course enroll very few students, but are very homogeneous. They talk about diversity a lot, but in reality they have a very homogeneous population, particularly in terms of income, wealth, and whether their parents went to college.

So you have that. And there was a period in America when a lot of colleges enrolled all three of those groups at once.

Steinbaum: Yeah, that is a very good summary. I would say the one point that neither of us has made so far is the calibration, the reengineering of the sort of mid-tier state school away from providing an academic education that’s broadly applicable to a student population that is mostly in-state, both in the past and in the present. They’re not offering that anymore, and they have accommodated themselves to the world of plutocracy and privatized funding by converting solely to a sort of workplace training model.

And that’s especially important to highlight in the present discourse where a lot of political elites are saying the problem with higher education is that it’s not keyed to the real world enough, that you have woke professors teaching unimportant subjects to students that don’t need that kind of an education in order to do the jobs that are actually available on the market.

The fact is that is the way in which the higher education system has already been reengineered. This is why I say the elite reaction to the current loss of trust seems to be more of the same. “More of the same” means disinvestment from academic programs serving a nontraditional population by means of the broadly accessible state four-year institution, and instead replacing that curriculum entirely with students’ interests narrowly in the workplace.

That’s the point that I would make about this as a labor economist, which is, you think this is supposedly more relevant because it’s teaching you the skills for the jobs that are actually available. But what it’s actually doing is letting employers dictate the curriculum and transferring the cost of training for the jobs that those employers are offering from the employers themselves to the students in the form of tuition and student debt.

They figured out how to transfer the job training to the students and they dominate the curriculum. And that kind of ties students to being pre-dedicated to a given career and specifically a given employer.

What I study from my work on labor economics is the dependence of workers on employers and the coercive ability that confers on employers. Basically, I view this erosion of the academic potential of the mid-tier state university as one mechanism by which employers exercise control over their workers. Teaching workers the curriculum that they need for the jobs of tomorrow—or whatever the buzzword is—is really tying workers to their future employers and eroding their ability to earn money in the labor market because basically they don’t have any broadly applicable skills or fewer of them.

Bacon: So, to be a little bit more reductive again on my end, at least in the political discourse I follow a lot on the right, what you end up with is this: They’re complaining about—again—are they complaining about you in different ways? And when I say you, I mean your work. You’re for forgiving student debt. You’re for a different economic system.

When I listen to Josh Shapiro and other politicians complaining about higher education, what I think I’m hearing is that Republicans don’t like college professors and elite universities because those professors say things that are to the left of them. They advocate for an economy that is less capitalist, and so on.

But I think something similar is happening on the center left. The professors who are “too woke” are actually a very small number of people who have public platforms. We also have a lot of highly intelligent people. And following your Twitter feed, I do get the sense that Joe Biden’s White House staff probably did not love you, and would probably love to say, All college professors are like that guy.

So we have a class of people—at a lot of colleges—who are highly intelligent and who do not share the views of the elites of either party. That’s what’s actually going on here.

Steinbaum: It’s interesting to think what either the right or the center left think of me in particular as a professor with a public platform who articulates—I like to think—potent criticisms of shared higher education policy consensus. I’ll reserve judgment on that.

So what they think of me ... I do think that broadly both sets of constituents, what they don’t like about the higher education system is that it permits relatively high-prestige, relatively well-remunerated employment to their critics. So definitely on the right, they think I should be dismissed basically on the basis of my ideology.

On the center left, I would say, as far as I have interacted with this world, it’s really not as much of an ideological critique, but more of a generational one. It’s basically: We senior policy people or professors, or however you want to conceive it, have been trying to defend the higher education system from its critics for 30 years, way before you got here, you young upstart. And the way that we’ve done that is by resting the value of the higher education system on the promise to increase individual earnings.

So you labor economists doing new—let’s say self-flattering, but I’ll say groundbreaking—work in labor economics, you’re coming into the higher education system and saying, No, you’ve got it all wrong. You’ve misinterpreted what the purpose of higher education is in the labor market.

And they’re like, That’s not helpful. We had a good defense of higher education going on the basis of its promise to increase individual earnings. And now you’re coming in and saying it doesn’t increase individual earnings. You’re the problem because you’re undermining the foundation on which the higher education system that we have defended has reconstituted itself.

Bacon: You made this point about elites versus the public. Why do you think the public is down on higher education? Because this is interesting—your theory is interesting. Why does the public have very different concerns that we’re not addressing? Cost is obviously one concern, and that’s always been there, but what else is there?

Steinbaum: Yeah, so the elite consensus critique of higher education is in the nature of what we’ve already been discussing: that it is a bunch of overpaid, overconfident professors that aren’t doing anything that’s really worthwhile for the public.

And crucially, what is true about the elite critique is that it doesn’t center what I think is wrong with the higher education system, which is plutocracy.

So the public’s critique of the higher education system—what I like to imagine myself more aligned with—is: This system used to be available to us. It used to be part of the local fabric of the economy, both from where I’m going to send my kid that offers an affordable higher education. That’s where I want my kid to go—the university that I’ve been paying tax dollars towards my whole life, and they’re going to be living in this state too. That’s part of what this local, geographically-demarcated society is about, is supporting this higher education edifice.

That’s been closed off by the withdrawal of state funding. What I articulate in the papers, what I view as this downward spiral is where state governments that have been taken over by plutocrat-serving legislators say, We’re going to cut higher education.

The state flagship institutions that have some ability to recruit out-of-state and do the University of Alabama model say, OK, fine, just basically deregulate us completely, make us, to all intents and purposes, not a state institution. We’ll absorb the funding cut, or at least the funding reorganization, and we will go out and recruit higher-paying students from out of state. Just don’t make us enroll too many students from in-state, because what is wrong with the funding cuts is that we needed that money in order to educate the students you wanted to educate. So if you’re going to cut the funding, don’t make us admit those students that are harder to educate—or whatever line the institutions would come up with.

The state legislatures agree to that because their main priority these days is cutting taxes for rich people. And the institutions basically are no longer available to most of the state’s population other than maybe to children of the legislators themselves.

Then next time the funding cycle rolls around, the state legislature is like, Why would we fund this? It’s basically a private institution at this point, and they can support themselves by going out of state or going into partnerships with local employers or whatever. It’s no longer our business.

And that bespeaks the alliance and the ideological consensus among the ruling class of whatever nominal ideology you’re talking about, and separates them—the higher education system and the plutocrats who run it—from the public that they’re no longer serving.

I don’t imagine that the broad majority of the United States population shares my left-wing views. But I do think they want a higher education system that they think is affordable, that offers a high-quality education to their children, and is part of the local economic fabric. And I view that as basically requiring a total, pretty radical reform to the higher education system that has come to exist over the last couple of decades.

Bacon: And now let’s come to those reforms, which I found very interesting. OK, so the first one is direct federal institutional funding.

So you want colleges and universities to be funded by the federal government. That feels really weird right now, but even without Donald Trump, it feels challenging, instead of being funded by the states. Unpack why that would be important.

Steinbaum: So not instead of by the states—that is to say, we’re talking about replacing ... there’s basically a three-legged stool in the current system. There’s tuition—student tuition backstopped by federal loans—there’s state appropriations, and there’s federal research grants.

The federal research grants not only fund research, but there’s overhead on top of that. So a big source of specifically the state flagships’ funding is basically 50 percent overhead on top of any federal research grants. So [those are] the three big pots of money that exist in public higher education.

What we propose is replacing the tuition pot with direct federal funding of the institutions. And in fact, we also propose replacing that overhead. The federal funding would not be tied to research grants through the research agencies. It would come directly as part of the federal government’s education policy through the Department of Education appropriations. That’s basically the idea.

Bacon: It’ll be on top of state funding.

Steinbaum: So not instead of by the states—that is to say, we’re talking about replacing... there was still, we are definitely saying the economics of the proposal rely on basically maintaining levels of state funding, which we’ll get to, because I don’t think that we should take that as given by any stretch of the imagination.

But it’s not replacing the state appropriations. The economics works if the state appropriations basically stay at the current level. So that’s what we contemplate.

Why go to institutional funding? Basically that tuition leg of the stool that I just described is already federal funding, is our argument. That is to say, the federal government is originating 100 billion dollars of new student loans every year, of which 70 percent of that principal value will never be repaid. So it’s already funding institutions through the indirect mechanism of backstopping their high tuition, and then the students don’t actually repay the loans.

And the institutions and the whole system likes it that way because it’s basically no-strings-attached federal funding, because the mythology is the free market regulates institutions. And the free market operates through students freely choosing which institutions they’re going to go to, and they’re going to go to the one with the highest value. And if they’re choosing wrong, we can help them choose.

There were a lot of policy moves starting under the Obama administration of: People are making the wrong choice. So let’s inform them about which institutions really are the high-quality institutions, so that free market mechanism will operate more efficiently.

I don’t think the free market mechanism has any hope of operating efficiently. I don’t think—this is similar in some ways to health care, where yes, it’s extremely expensive and if you make students pay the full tuition—that is to say, without backstopping with federal student loans—they’ll definitely spend less on higher education and they’ll cut back. But individuals are not very good at choosing high quality. No shade on individuals, it’s just the type of market where the free market is never going to be an effective regulator.

So you need someone who actually has an education policy and knows how the system works. Ideal world, the federal Department of Education would play that role of a sector-specific regulator. And they would say, We are the paymasters. We’re not going to do this backdoor thing through unrepayable student debt. We’re going to fund directly and we’re going to have some pretty onerous strings attached.

And that is exactly what the current crop of institutions is most afraid of: those strings. That is to say, one big string would be you can’t charge tuition.

So I’m not a doctrinaire free-college guy. What I am is a doctrinaire uniform-tuition guy. So I don’t like different students paying different tuition, because to me, that invites the institutions to try to basically pick and choose their student body for the highest tuition payers. So I’m saying, basically my version of the regulation would be low uniform tuition across applicants, backstopped by the federal institutional appropriations and other regulations, such as no plutocrats on the board of trustees, no what I call “credentialing master’s programs.”

So another thing that institutions do is create these professional degree programs that are very expensive. And they basically tell students, OK, you need this in order to get a job. And they’re preying on students’ career anxieties kind of thing. That would be eliminated.

So given that all of the degree programs that the institutions would be offering are operating under our imagined federal institutional appropriations, that gives the federal government direct power to say, You can’t offer that program if it doesn’t serve our aims. And the criteria that we’re proposing is basically it has to be in the public interest, not in the interest of moneymaking on the part of the institution.

Bacon: You said on that, a reflex free-college guy. That struck me, because I didn’t necessarily expect you to say that. But I guess the point being you’re not for every college charging a hundred grand per student. Your point is that there’s something uniform—say, $5,000 of tuition a year.

And if you have to go into debt for that, we’ll talk about how to do that, but a uniform policy.

Steinbaum: The uniform is what’s important and what is contrary to the status quo where, you know, one of the myths that we attack in the paper is the idea that charging different students different tuition is progressive because it redistributes from the rich students to the poor students. That’s not how it actually works, is our argument in the paper.

How it actually works is the students who have a lot of outside options, which tend to be the more well-off students, they’re the ones the institutions are lusting after to try to recruit. And the people who end up getting the short end of the stick are the people who don’t have a lot of outside options. Those are typically going to be in-state students, and they’re the ones where tuition has gone up and especially student loan repayment has been going down.

So my view is you have to have uniform tuition in order to create neutrality on the part of institutions in terms of which students they want to enroll—or increase neutrality. They’re not only going to be going after the wealthiest students.

The other thing that’s worth saying here is: You would think that the free-college proposal—for example, the ones that Warren and Bernie put out in the 2020 Democratic primary—you’d think that state higher education institutions would be some of their loudest supporters, because it’s offering a huge amount of federal money basically to reduce tuition. Why wouldn’t you want that if you’re a higher education institution?

The fact is: they all uniformly opposed it, and they’re the reason why it died in the Biden administration. Even in the Biden administration—it trickled down to free community college. And they killed even that.

And the reason why they killed it is because the whole idea of free tuition and an entitlement to higher education takes away the institution’s gatekeeping power. And the institution’s gatekeeping power is what they sell to their plutocratic supporters on the board of trustees or among the donor community.

The institutions want to be able to pick and choose who’s allowed through our doors and who gets our degree. That is how they confer prestige upon themselves and upon their students. And that is why any given billionaire would want to be on the board of trustees, is because they can tell their friends at cocktail parties, I’m on the board of this super prestigious institution, or I’m on the board of this institution.

You will have heard of it because your perception of it is that its prestige is rising. The way that institution’s prestige rises is by enrolling a more elite student body, and all of that is just—

Bacon: Your proposals for public colleges—you’re trying to prevent the public college from becoming less public. You’re not going to touch, necessarily, the Swarthmores and the Yales.

Steinbaum: No, we’re going to touch them. It’s a little subtext in the proposal, but basically what it says is that everyone loses access to the federal student-loan mechanism unless they comply—unless they submit to the regulatory apparatus.

And the regulation, for example, includes not having plutocrats on the board of trustees. So if Yale wants access to the federal student-loan program, they have to totally reconstitute themselves—not have their board made up of the wealthiest Yale grads or whatever.

And they have to enroll—they have to charge uniform tuition. So would Yale want to do that? I don’t know how dependent they are on the federal student-loan program.

Bacon: Sorry—let me interrupt. You’re saying we’re going to have uniform tuition, but there’s still going to be federal student loans?

Steinbaum: The uniform tuition—that’s an undergraduate thing. Let me be clear. The proposal says everyone gets one free undergraduate degree or technical qualification. So the proposal says free. I said on this show that I’m not—free isn’t the thing to insist on.

To me, uniform tuition is the thing to insist on. And uniformity is what’s really threatening to the current stratification in the higher-education system. So Yale can still charge tuition to undergraduates as long as it’s uniform. Graduate studies still have tuition associated with them.

Although we would cap that, too, because if there’s still a federal student-loan program handing out loans for advanced degrees, we don’t want it handing out indefinite loans like that. In some ways, that is exactly the weak point of the federal student-loan program that currently backs up tuition. Even where you have some states restraining undergraduate tuition growth and doing some version of free college, they’re definitely pushing graduate tuition in order to make up the shortfall.

And that’s pushing a lot of loans onto the federal balance sheet that aren’t ever going to be repaid.

Bacon: So the cost is uniform—for whom? For every student?

Steinbaum: When we’ve been talking about uniform tuition, that is among undergraduates attending a given institution.

Bacon: Colleges currently charge some students more than others.

Steinbaum: Oh yeah.

Bacon: And that has been increasing—they offer different financial aid.

Steinbaum: Yes, exactly. Financial aid is a form of price discrimination, tuition discrimination among the student body. And the argument among the center-left or centrist higher education policy establishment is that it is progressive: We want more of that because what that means is higher tuition paid by the students with more ability to pay. And that enables us to offer more generous financial aid to poor students.

And that is just not how the higher education system works. The schedule of tuition as a function of parental income is getting steeper, especially at state flagships. But what’s happening on the other end is not: OK, we’re using that excess tuition to fund generous financial aid packages for lower-income students. It is that we are not admitting as many lower-income students.

So the state flagships in some sense are going more in the direction of what, say, the Ivy League or endowed private institutions have been doing for a while, which is they say: We have a very progressive tuition schedule because we offer generous financial aid. We just don’t actually admit any poor people.

Bacon: That is where the state flagships—the uniform cost would have to be fairly low.

Steinbaum: Yeah. In my world, the 5,000 you mentioned—that is, $5,000—is higher than what poor students pay in the status quo for state mid-tier institutions. But I don’t know—it’s probably about average, actually. State flagships are at higher tuition, including for poor students. So we would basically say everyone pays a uniform cost—or uniform tuition—across the board.

What that does is hopefully generate this pooling equilibrium where the name over the door doesn’t matter as much. Most institutions are offering comprehensive programs to a wide variety of students, and you go to your local university rather than trying to go to the most prestigious university, or the one that will offer you the most tailored financial-aid package.

Bacon: So that’s the—let’s move to your second idea. System integration and desegregation: build geographically delimited systems, but institutions that are serving heterogeneous student bodies. So the ideal, in your mind, is that a college has lots of different kinds of students, of different income and wealth backgrounds, and so on—and that we’re moving away from that.

That’s an important core point: where you went to college becomes a symbol for all these other things, if colleges are actually fairly diverse in a thousand ways.

Steinbaum: Yeah. Yes. A thousand ways is an important point to make. I guess to throw out even more economics jargon here, I already talked about pooling equilibrium and separating equilibrium on this call. Another form of jargon would be we propose horizontal differentiation, and the current reality is vertical differentiation.

So in the economics world, vertical differentiation means some products are better than others. The better product has higher prices. The richer people buy the better product at the higher price. The poor people buy the worse product at the lower price. That’s the higher education system that currently exists. We don’t like it. It’s like cars and everything else we don’t want.

The horizontal differentiation might be: OK, your state public higher education system might have a liberal arts college, and it might have a large research campus, and it might have a teaching-focused four-year institution in it. But those things are all accessible to all types of students.

So a student who wants a liberal arts education can go to the liberal arts one, but that doesn’t mean that they’re of lower status than the people who go to the research one. That’s the idea: There’s value in differentiation in the higher education system, but that differentiation should not be about sorting students by background or by their income. It should be sorting students by their interests and their own tastes in what they would want out of a higher education system.

Bacon: In other words, there could be a new school—or whatever the thing in Florida was. There could be a research school, there could be an engineering school that’s more focused on math and science. But those things would not just—it would not be only the best students, or really the richest students, at one institution, is what you’re getting at.

Steinbaum: Exactly. Yep.

Bacon: OK. Your proposal would be funded by ending underwater lending. We can get into that a little bit, but talk about the funding. How does that work?

Steinbaum: Yeah, so as I said earlier, my assessment is the federal government is originating 100 billion dollars of student loans every year, of which 70 percent is not going to be repaid. So the biggest source of funding in our proposal is 7 billion or 70 billion of new student loans that instead would be allocated toward direct institutional funding, as we’ve already talked about.

So that’s already, when you look at the numbers in the free-college proposals from the late 2010s, that’s the ballpark we’re talking about. That is to say it’s not a huge outlay. And the point I would make is this: Underwater student lending is due to tuition inflation on the part—or partly due to tuition inflation—on the part of institutions.

So the federal government, the key question that always kills progressive policy proposals supposedly is: How are you going to pay for it? And my argument is we’re already paying for it through this underwater student lending. So there’s no new money there.

The other big source of funding that we propose that takes us up to just over 100 billion is the overhead on federal research grants. As I said, the federal research agencies—NIH, National Science Foundation, climate research through NASA, NOAA, I think, and the Department of Defense—all of those provide this 50 percent on top of any grant toward the infrastructure of the university.

We would separate that money from the research grant. So they’re still funding research. Research is still important and the federal government should be funding it. We have proposals on how to reform that too, but basically sever that overhead and put that in the pot that goes in direct institutional appropriations.

And the reason there is because tying the overhead money to researchers creates a stratified political economy within higher education. The institutions are trying desperately to recruit the sort of top-flight scientists that bring in those million-dollar research grants from the feds, because that money comes along with the overhead, and that’s what keeps the lights on.

If the institutions [were] getting that money other than through the recruitment of top scientists, then the idea is there’s more egalitarian wage distribution, you could say, within higher education itself.

So there’s a whole section of the paper that’s about dismantling the academic 1 percent and rebuilding the academic middle class. The academic middle class in my mind is basically the tenured professoriate, which is a dwindling share of all of the academic labor. We have adjunctification and other forms of proletarianization and deprofessionalization of most academic labor. And then on the other end of the spectrum, you’ve got the 1 percent of people that are pulling down high six-figure salaries because they bring in this research—the overhead funding that the universities need.

So that kind of plutocratic political economy within higher education would be solved basically by severing the institutional aid from the research overhead. So those are the two big sources of money.

And then, as I said earlier, also, the economics don’t work if the states withdraw funding or try to avoid the whole... the big concern in the 2010s was “maintenance of effort” on the part of the states. If the feds up their funding of higher education, how do we know the states aren’t just going to reduce it? And that’s obviously been an issue in federal policy before. So we have some proposals in the paper to basically prevent that from happening as well. So we could get into that if you want, but that’s basically the financial architecture.

Bacon: Yeah, when you talked about universities and grants, it reminded me of how much of the crisis right now feels like the Trump administration is cutting off federal research grants, and therefore these universities are losing a lot of money.

But I want to talk about something else you emphasize, which is wanting a bigger role for the federal government in higher education than we have now. And I think a lot of people—particularly New Republic listeners and readers—are thinking, dear God, does this mean Donald Trump and Stephen Miller and that whole team doing more in higher education?

So reconcile that for me a little bit. How would someone who is not a Trump supporter right now support a larger role for the federal government in higher education?

Steinbaum: The baseline argument is what enables the current Trumpian assault on the higher education system is the loss of trust among the broad public and many key stakeholders going back over decades. And so the strengthening of the federal role in higher education is meant to restore the public’s trust. And what we argue is basically you need to do that if you want to reform higher education in a pro-social direction.

So the alternative is exactly what you enumerated, which is I think a lot of what the sort of center-left or centrist higher education policy establishment is coming forward with: We need to take the politics out of medical research. And the way that we do that is by separating the higher education system even more from the federal government.

And the fact is that is nothing more than a slogan because of all the reasons I’ve given. The system is totally dependent on the federal government. That’s why the Trump administration has been able to throw its weight around so much.

So I don’t think any of those people that are saying We need to separate medical research from politics and take the wokeness out or whatever as a means of saving higher education—they’re not proposing a huge increase in state appropriations to higher education or levying new taxes in order to support it other than through the federal system.

They’re just saying rhetorically, The problem here is that the [protesters] polluted the image of higher education and that alienated the plutocrats. And we need to bring the plutocrats back on board by basically crushing the [protesters] even more.

So that’s the kind of criticism of higher education you would get from Silicon Valley or something like that. We kind of... we replaced excellence. That’s their new kind of buzzword: We replaced excellence with wokeness or however they want to characterize it. And that is the problem.

So we need to side with Silicon Valley there and say, Yes, we are restoring excellence. We’re doing the most cutting-edge medical research in the world. You shouldn’t be touching that duty with your ideological agenda. Instead, leave that be; don’t interfere.

And I... it makes sense if your constituents are Silicon Valley billionaires, it makes sense that you would argue that point, but I don’t think it is a very... it’s not going to carry a lot of weight when it comes to the politics of higher education because that is tailored to a very narrow constituency.

The much broader constituency is thinking: I just want my kid to go to the local university and have a good education there and not be paying back the student loans for the rest of their life. And have it ruin their lives. That’s all I want. And that constituency is served by a more egalitarian system, not a more stratified one.

Bacon: Let me move to the fourth point. I think this is an important one—labor reform—because I think part of what’s going on here is that the way you want to protect academics who have views the political establishment may not like is not by getting politics out of education, because you probably can’t do that.

Your solution is to make sure that professors and faculty have real protections. So if they say something on Twitter or Bluesky, or whatever, that the center left—or more broadly, Republicans—don’t like, they have labor protections. The way to protect academic freedom is not by getting the federal government out of education. We’re never going to do that. It’s by having real protections for the people who work in higher education.

Steinbaum: That’s right. Yeah. I think there’s been no greater protection than solidarity on the part of academic labor so far. And there’s a lot more upside; that is, they haven’t—not by any stretch of the imagination—hit the ceiling of solidarity among higher education labor. So no one’s going to save us other than ourselves is my ethos when it comes to the assaults on academic freedom.

And also, I think for all of its flaws, the professoriate is basically the—and I should say academic workers more broadly are the—stakeholder that has the greatest motive to make the higher education system egalitarian and broadly accessible. That is to say, if you’re looking at administrators, they’re trying to do the opposite: to stratify their institutions in order to appeal to plutocrats because they think that their saviors are going to be billion-dollar or billionaire donors who endow new centers or whatever.

And that’s how they’ll save themselves. And say, legislators basically... they only want the institution that they think glorifies themselves and their supporters. Basically, I see state legislators as being broadly at this point subservient to the plutocrats on the board and not to the broader state population. They’re not interested in providing a public good to the people of their state.

There’s just a very few public officials who have stood up for an egalitarian public higher education system. So when it comes to which of the existing higher education constituencies are the ones that serve the public interest most, it is definitely the academic workers operating in solidarity. I would say my own perspective is ... especially the ones that don’t enjoy the institutional protections that were available in an earlier era.

There is definitely a generational divide among academic workers where you have the older generation is: Let’s keep what we have. Let’s fight like hell to defend ourselves against this assault from all of our enemies.

And in my view, without recognizing the broad public loss of trust, it’s just... and I also think that comes from an earlier generation, frankly, of progressive politics, which imagines itself as [minoritarian], and that the broad public is opposed to us because they’re more conservative than we are: We are the righteous, moral elite. And our job is to protect the public from their own bad political instincts, which is to side with the right.

That has definitely not served academia very well. And I don’t... and I also just don’t think it’s true that academia doesn’t have the support of the broad public. I think it would if it offered a quality product. And the problem with the status quo is that it doesn’t, and we’re deluding ourselves if we think we should just cling to what we have and try to defend it against all of its hostile actors.

Bacon: We’ve glanced at this a few times. You talk a lot about democratic governance of universities. And I think the story of how involved these boards are—that’s something I didn’t fully appreciate until it came out during the repression of Palestinian protests, especially how active these boards are at private schools.

But talk about this, because I think it’s obvious that private schools have wealthy donors who give a lot of money and are put on boards because they give a lot of money. Explain how public schools have some of the same dynamics, where the board is unrepresentative and also dominated by politics.

Steinbaum: Yeah, it’s frankly not any different because, for all the reasons we’ve already talked about, the public institutions in name have really privatized. So what constituency are they trying to serve? That is at least a more, if not plutocratic, definitely a more socioeconomically advantaged population.

And then when you’re talking about lower-tier institutions, they’re trying to appeal to local employers. So that’s who’s on the board, so it’s: OK, your role is to educate our future workforce and you better do that according to my dictates and not equip them to go get a job somewhere else other than in my workforce.

So how does it happen? I think basically, for the same reason it happens in the private sector, you have investors, so to speak. Donors in this case want representation and control over the institution they’re supporting.

So as these university systems have become more dependent—or less dependent on state appropriations, or the state appropriations are now conditional on getting funding from other sources—the administrations have gone around with hat in hand trying to collect donations.

One, we live in a plutocratic society anyway, so it’s who has the money? When they collect donations, they’re not collecting a couple hundred bucks from a random alumnus who has broad, warm, fuzzy feelings towards the place they went to college 20 years ago. They’re going to the people with the money, which is to say billionaires.

And when billionaires give money, they give obviously a lot more per call. But they also demand more control, unlike the person who’s giving a couple hundred bucks because they have warm, fuzzy feelings towards their alma mater. They’re not asking to be on the board. Maybe they want a look at their kid or something like that. But even that seems old-fashioned to think that’s their motivation at this point.

The plutocrats, they want to be represented on the board. They want to control the institution. And as I said earlier, at a cocktail party where they’re talking to other plutocrats, when they say, Oh, I’m on the board of X University, they want their interlocutor to hear that and think, Oh, that is a university that I perceive has risen in status and in prestige. So it reflects well on you that you are on the board of it.

So that is the dynamic that kind of brings the plutocratic interest to bear on what was once a public institution. And the plutocratic interest is very much on gatekeeping access to the ruling class.

In my opinion, basically the reason why higher education politics is so fraught—and the way that I see it—is no matter what, it controls intergenerational access to the ruling class. Basically, social reproduction happens through higher education no matter what the higher education system looks like.

So either you have social reproduction that is relatively egalitarian because people from nontraditional elite backgrounds can get access to the elite through the higher education system. Or you have social reproduction that is completely plutocratic because a ruling class rigidly reproduces itself generation after generation.

And a more plutocratic higher education system is going to have the latter context where, you know, a plutocrat sits on the board, runs the institution in a way that they think they and their friends would want their children to be educated. And mostly that involves excluding people that should not be the peers of their children. And that is basically what the system that currently exists is designed to do.

Bacon: So ruling class is a little tough to define. Let’s play this out. Let me—let’s personalize it a little bit. I don’t recall where you went to college, and I’ve just forgotten.

Now, you can share that or not. I went to Yale, and I think that’s relevant to this conversation only because I think a lot of the people who populate elite institutions in America—and I was, until recently, a columnist at The Washington Post and The New Republic—are, let’s call it, part of the ruling class for now.

A lot of those people—if you go to Congress, for example, and look at senators and members of the House—disproportionately went to 10 or 15 very elite colleges, and so on. So just thinking this through a little bit, part of it is that my dad did not have a college degree, et cetera. My parents were not wealthy at all. My mom got her B.A. three months before I did.

But anyway, the point being that that’s unusual for Yale. I think the point is that these universities—our college-education system—have allowed more people in than they did in 1950. There are more Black students at Yale than there were in 1950. But in general, it’s still reproducing these inequalities, is what you’re getting at.

That’s the broader point: even as it has some social access, even as it’s doing some redistribution, it is in general re-entrenching the economic divides we had before.

Steinbaum: Yeah, I definitely broadly think that if you look back at the higher education system that existed at the end of World War II and compare it to the system that exists now, I don’t know which one is more stratified. We definitely had less stratification between the end of World War II and the end of the 1960s through a variety of means.

There’s the GI Bill from the feds and more generous research funding from the feds. We also had state appropriations that were really designed to vastly expand systems to a newly well-educated state population. So there... it’s like the high school movement.

So the sort of universalization of high school education is a broad phenomenon from the late 19th century to the middle of the 20th century. The demand for more higher education at the state level is a phenomenon of the interwar period. To some degree [it] predates this, but in terms of a mass higher education phenomenon, it’s an interwar phenomenon.

And then what happened after the war is the sense that: OK, we’ve expanded the system, but it’s too disorganized. There’s too many different types of institutions and they’re doing different things. We need to standardize it to some degree, but do that in an egalitarian fashion.

So throughout the 20th century, there’s basically been a fight within higher education policy that is: The system’s too disorganized, we need to make it more well-constructed and efficient, but exactly how do we do that? By making it more stratified? Or do we do that by making it less stratified?

In the postwar era, “less stratified” won out for a brief period of time. My view is basically it ended with the backlash against campus protests in the 1960s that was viewed by the ruling class as being the sort of end result of the New Deal and civil rights movement creating a threat to the social order that was ultimately out of control and had to be put down.

And so you had this elite consensus between what you might think of as the elite center-left and the elite center-right in the late 1960s and early 1970s to convert away from institutional funding towards student debt as a means of disciplining the student body. Getting the faculty under control, because all those people definitely did not like what they perceived as an overly radical faculty that had too much job security.

So between those things, that elite consensus is what created the higher education system that we have now. And as you described it, you can tell what kind of institution someone is going to go to by their socioeconomic background and vice versa.

For a given institution, if I tell you a student is at some institution, you can make a very good guess about what their socioeconomic background is on the basis of that information. So that institutional stratification—this is where we started this conversation—that is what I perceive as the signature quality of the higher education system that currently exists.

Bacon: And your point is that when something is stratified like this, it’s inevitably going to be unpopular—yeah.

Steinbaum: These beautiful universities. Everyone says, oh, we have the best higher-education system in the country—I mean, really, in the world. And that’s the defense against Trump: How could you destroy this beautiful creation that is a credit to our country? I just—I gag or vomit whenever I hear that.

Bacon: You mean the Harvard people are saying, don’t destroy Harvard or Yale, or—

Steinbaum: Even the University of Michigan, or the University of Utah, where I teach, for that matter. It’s like: This is so great because it’s world-class and supposedly does all this groundbreaking research that’s a credit to this country, that powers our economy and attracts students from overseas. Yeah, all of those things are true, and that is an aspect of the higher education system that’s worth defending, but...

What I imagine most Americans hearing when they hear the phrase, This is the best higher education system in the world, is: One, OK, my kid’s not going there or doesn’t have access to the best ones. They have access to a defunded state institution that’s no longer offering an academic education.

Or alternatively: They got charged through the nose. They’re still paying off their student debt, and that’s the best system in the world? That ruined my life. That didn’t give me the economic status and middle-class security that I expected from it. In fact, that screwed me over.

So I really think trying to defend the system by saying how great it is, is a wrong path. Definitely not what a sound majoritarian political movement would use to defend the system that exists for the majority.

Bacon: The reason I mentioned where I went to school and so on was that I think part of what I was trying to get at—and failed to—was not to brag about myself, but to say that the problem is that the people who benefited from the system are the ones in the jobs describing the system.

And, yeah, I remember when it comes to student loans, it’s hard to get a bunch of Yale graduates to say the system is stratified—and entrenching our power—because why would they say that?

So part of it is that the people in the broader public, and the people who attend these defunded colleges, don’t get a chance to speak very often in the forums that matter.

Steinbaum: Yeah. I totally agree with... that’s a huge weakness of the sort of higher education policy establishment that has tried to defend the system from Trump: how elitist it is for the reason that you’re saying.

Their experience of higher education is: This is what put me in the job—in the high-status job that I have. It’s because I got a master’s of public policy or whatever at some... at the Kennedy School at Harvard or something like that. Or I went to Yale Law School. That is what gives me identity.

So you’re coming after the institution that I place all of my identity in, and that is not the higher education system that actually exists. And as you say, the people who have to deal with that higher education system don’t get heard in the halls of power.

And then the other aspect of that—this is who’s defending it—is the people who benefited from it. It is exactly like they’re going to say: OK, protect my thing, protect the thing that I like.

So they’re going to keep chopping off aspects of the system that exists and throwing them to the wolves to protect the thing that they care about. And what they’ve chopped off is the thing that the public actually had an interest in preserving. And so now those people have betrayed what should be their public constituency.

Bacon: So what’s next? Let me finish up here. What comes next for this kind of project? You’ve laid out a big, broad idea of really changing the higher-education system in fundamental ways—ways that, as you acknowledge, a lot of people who consider themselves Democrats, and maybe liberals, don’t agree with.

So where do you go from here? This idea that we need a different system, with the federal government involved, but in a different way than it has been before—how do you build toward that? I’m not even sure Elizabeth Warren wants all of these ideas right now. How do you build the system to move this forward?

Steinbaum: So really the motivation for embarking on this project to begin with—which is absolutely not over by any stretch of the imagination... I’ve been studying these subjects for a decade now and that’s only the beginning. I plan to spend the rest of my life on this kind of thing.

It is because the fight over student debt cancellation—student debt in general, and then as it morphed into cancellation specifically as a policy proposal toward the end of the 2010s—I felt was too focused on student debtors as the victims of... or I, not victims, not quite the right word, because that is how I see them. It’s more the sort of sympathetic, downtrodden that we have to help and lift up from above.

And moreover, the criticism then was: OK, if you cancel the student debt, that’s your policy proposal and we’re just going to have to do it again in 10 years after more student debt is accumulated. Yeah. Legitimate. Yeah. I think that is a legitimate criticism.

So both of those two concerns that I had coming out of the sort of last round of higher education policy war speaks to the need for an alternative vision from the left that gives people a chance to rally around again.

I don’t like that the centrist elites are so focused on: The system is good. Why are you attacking this good system? Or at least the part of the system that educated me is good. Why are you attacking that part? Let’s sacrifice something else to preserve it.

That just isn’t... the public wants to be educated. They want access to a high-quality, reasonably priced higher education, and we have to give it to them. And that is what the policy proposal is trying to do.

So if you’re asking concretely, what do I plan to do with it? I’m hoping that political candidates would be asked: OK, do you support this proposal or elements of this proposal?

I think a big cleavage, as this conversation has already alluded to, in the pretty near future is: Do you want to get the federal higher education further separated from the federal government, or do you want the federal government to take ownership of the system that they’re funding and improve its quality?

So I think that, regardless of the exact details of what’s in the proposal, I think that cleavage is going to be very central to, say, the way this is talked about in the midterm election or the next Democratic presidential primary round. So that is a big motivation for putting it out there.

I also think it is—aside from candidates going around and being asked, What’s your higher education policy agenda? and hopefully they’ll say, Oh, that paper... I like that paper. That’s my agenda—is just the public demanding that of state legislators.

Not... not so much on the political campaign, but there’s... at present, when higher education administrators and regulators go before the state legislature and are grilled about “wokeness” and “run amok” on campus, they basically have nothing to say that in my view is healthy towards the long-term interest of the higher education system.

Bacon: Were they looking to deflect the point, or to say, we have intellectual diversity, and start counting the Republicans they need?

Steinbaum: Exactly. None of that is a robust defense of the actual system. So in my view, this is a robust defense of the system and it is a vision that both... at least in theory, I mean, I don’t imagine plutocrat-dominated boards of trustees are going to get behind this vision anytime soon.

But you could imagine some higher education administrators looking at this and saying: This is what I’m going to say we’re doing at my campus and why it should be funded by the state legislatures, because we are actually providing a high-quality education to the people of this state.

Alternatively, it’s the kind of thing that in the hands of a state legislator—I’m imagining a pro-social, not necessarily the most left-wing state legislator, but someone who wants to be seen as creating a public good, fostering a public good for the people of their state...

They would have this proposal in front of them and question the regulators and the higher education administrators that are in front of them at hearings and say: Why are you trying to recruit... why are you trying to recruit out-of-state in order to make up tuition?

That has been the kind of thing that state legislators are pressuring flagship public institutions to do in the past. To some degree, there are some, say, legislators that have put arbitrary caps on that, but also not funded the institution. So they’re tying the hands of the administrators because that is a populistic-seeming thing to do.

The whole point is this proposal hangs together as a comprehensive agenda. So it is the kind of thing that could motivate a progressive-minded state legislator to take up and champion: I’m going to build a higher education system that actually serves the interests of the people who live in the state.

And that involves not recruiting out-of-state. It involves not trying to get the best researcher that brings in the most federal grant money and kind of subordinating the whole institution to that. It involves providing an affordable, high-quality education to everyone in the state who wants it, regardless of their background.

Perry Bacon: Let me ask one final question. This is happening all the time now, where Democratic Politician X—who maybe should not be lecturing anyone, having sent their kid to a fancy school, or having made sure their kids went to Penn, or whatever—that’s a good example, because Joe Biden says things like this even though all his kids went to elite schools.

What they often say is, Everyone shouldn’t go to college. College is not for everyone. Can we address this head-on here? I agree that college is not for everyone, but they’re not really saying that. What they’re really saying is that we want to make sure college is for everyone who wants to go—not just for people whose parents think they should be there.

Steinbaum: Yeah. And I would further point out, I mean it’s especially galling for me to hear that now from exactly the type of politician who 20 years ago was saying: Everyone should go to college. Because that is how you get into the middle class. And the college earnings premium is so high that if anyone goes to college, basically any amount of student debt, any amount of tuition is worth paying for it because the college earnings premium is so enormous.

Now that exact same politician—or type of politician—is saying: No, not everyone should go to college. Because it sounds populistic to say, Oh no, I support trade school or whatever.

And so you and I support trade school. But I also think the trade school or the trade-ification of the higher education system amounts to transferring the cost of job training onto students’ shoulders. So it is not, in fact, as we have already talked about, it’s not in fact a pro-working-class message, at least in the reality of that.

And I don’t think politicians like... What I would diagnose in this case is the politicians don’t know what to say about higher education. They want to say something that doesn’t sound so elitist and so “woke.” So they’re saying: Ah, trade school. That’s what I’m going to say.

And I’m giving them something else to say that is, in my view, actually pro-social and would actually bespeak a progressive reform to the higher education system that is populistic, that isn’t actually serving the interest of employers as opposed to workers. So that’s what I mean. That kind of person. Yes. It pisses me off too.

They are in fact saying: You shouldn’t go to college. Only my kid should go to college. God forbid we actually have a higher education system that the broad public can access.

If they don’t want to be caught saying that and being correctly interpreted by their audience to say, The higher education system isn’t for you, they can instead espouse the views and reforms that this paper puts out. I’m offering that to them in good faith and they can take it up. It’s now available to them. They can’t say there’s at least no other ideas on the table.

I guess that’s the best I can do, is I can make it the case that there are better ideas on the table and it’s on you if you don’t espouse them.

Bacon: A great conversation. I learned a lot, Marshall. Tell people where they can find your ideas generally—where you are on social media and other platforms—and then, second, where they can find this specific proposal.

Steinbaum: Yeah. So we really dove right into the substance without my saying this upfront. This paper is a joint publication of the Jain Family Institute, where I’m a senior fellow in higher-education finance, as well as Higher Education Labor United, which is a coalition of union locals representing workers across various parts of the higher-education system. So it’s pretty ecumenical in terms of faculty, academic staff, graduate students—different locals representing different aspects of the higher-education workforce.

But in any event, they’ve come together as a coalition to put proposals like this on the table—proposals that are more responsive to the reality of the system that exists. You can go to Higher Education Labor United’s website—they have the paper posted there. It’s also on my website, marshallsteinbaum.org.

Bacon: I included a link to the proposal in the chat, if anybody wants to check it out. There’s a link there to Marshall’s proposal. But go ahead—sorry.

Steinbaum: Yeah. As you said in your introduction, I’m a senior fellow in higher-education finance at the Jain Family Institute. We publish a lot of reports, particularly on student debt, and some of the ideas in this proposal draw on work we’ve done over the years. You can find that work through our Higher Education Finance program at the Jain Family Institute.

My website is marshallsteinbaum.org if you’re interested in my other academic work—we didn’t touch on a whole swath of it, but if you really like reading academic papers, they’re all there. And I’m on Twitter at @EconMarshall.

Bacon: And I’ll just add that there are economists out there who are not Larry Summers or Jason Furman, even though the media often only calls those two people.

Steinbaum: Thank you. Thank you very much, Perry. I’ll end there. I am an economist who is not Larry Summers or Jason Furman—that’s enough. That’s all you need to know.

Bacon: Good to see you, Marshall. Take care.

Steinbaum: OK, great. Thank you very much. Bye-bye.