Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers

6 The 1980s: Middle-Class Assistance

6 The 1980s: Middle-Class Assistance Finding an efficient way to fund college choice by middle-class students loomed as a major challenge at the start of the 1980s. The Middle Income Student Assistance Act and the 1980 reauthorization of the Higher Education Act had liberalized federal grant programs so that, had this legislation been fully funded, they would have subsidized college choice for the middle class. However, since the provisions of MISAA had not been fully funded by the time President Carter left office, there was little chance that the new conservative administration of President Reagan would support the full funding necessary to expand Pell to the authorized level (St. John and Byce 1982). The Reagan administration did not even try to find funds for the full funding of federal grant programs, but it did find a way to promote college choice by middle-class students. Thus, finding a more economical way to provide middle-class assistance represents a theme for the decade. The Reagan administration came into office facing another challenge in education. Reagan had campaigned against the Department of Education , created in the Carter years, and against excessive federal spending on education and other social programs. However, his constituents were interested in educational improvement. The Education Consolidation and Improvement Act of 1980, planned by the Carter administration and passed before Reagan took office, set in motion a process of consolidating and simplifying federal K–12 programs. Terrell Bell, secretary of education in Reagan’s first term, responded to the new context by promoting the idea that the federal government could provide leadership by fostering educational improvement. In K–12 education, Secretary Bell started the educational improvement movement, which promoted reforms aimed at improving test scores for all students. He created the National Commission on Excellence in Education, which published A Nation at Risk in 1983. This sparked a new wave of federal educational reform. In higher education, Bell promoted the idea of “self-help,” which argued that loans and work-study should be the first tier of student aid (Hearn 1993). If students were required to work or borrow before get100 jhup.stjohn.000-000_jhup.stjohn.000-000.qxd 5/16/14 8:27 AM Page 100 ting a grant, then the costs of funding college choice for middle-class families would be substantially lower than if a grant-first approach were taken. While this argument did not gain support in the higher education community, it did have an influence on the evolution of educational policy , especially the emphasis placed on loans. In the second Reagan term, Secretary William Bennett (1986) began an attack on higher education institutions for being inefficient and for raising prices to increase the amount of federal aid their students received . Bennett’s leadership team argued that colleges were greedy and raised tuition unnecessarily (Finn 1988a,b). These arguments influenced the popular press and public attitudes about higher education finance. They also provided a form of “spin control,” obfuscating the erosion in federal grants and the new emphasis on loans. Meanwhile, the lobbying community tried to find ways to defend grant programs (Parsons 1997). These new conservative arguments affected the entire financing system. Thus, the decade of the 1980s was a period of refinancing. Debt became the mechanism used by middle-class students to expand their postsecondary options, while the shift in emphasis from grants to loans reduced taxpayer costs. This refinancing process also changed the foundations of the federal system of student aid that had been established in the late 1960s and 1970s. The new policies changed the balance in the emphasis placed on the interests of taxpayers, middle-class students , and students from poor families. Step 1: Changes in Policy To call the changes in funding in the 1980s refinancing focuses attention on the changes in underlying assumptions about student aid, as well as on the emphasis placed on loans. In this section I examine first how student aid policy changed in the 1980s, then two issues that provided the foundations for the new direction in policy: the college cost controversy and the role of loans in promoting educational opportunity. POLICY DRIFT, IDEOLOGICAL SHIFT The 1980s were also a period of policy drift, as major budget battles each year determined the course of aid policy (Hearn 1993). The intent of the enabling legislation ceased being a central concern. Each year the Reagan administration would propose major reductions in funding for...