Is Higher Education a Public or Private Good?

As higher education's mission has morphed from strengthening democracy to fattening wallets, federal and state governments have transferred the financial burden to students.

Updated March 8, 2022

Edited by Brenna Swanston
Is Higher Education a Public or Private Good?
Opinion & Analysis
Photo by cogal / E+ / Getty Images

  • Higher education was long considered a public good designed to benefit society at large.
  • During the 20th century, perspectives shifted toward the notion of higher education as private good that benefits individuals.
  • Students have increasingly come to view college as a means to economic security.
  • This philosophical shift has fueled today's student debt crisis, which has lingering implications for educational policy.

Since its earliest days, American higher education has had a dual purpose, benefitting both the individual and society at large. As such, our education system exists somewhere between being a public good and a private one. When the system shifts within this continuum, it has profound impacts on public policy, colleges and universities, and the students in higher education.

How Is Higher Education a Public Good?

The notion of higher education as a public good suggests that an educated population benefits humanity at large. More educated individuals create a better society for all.

College graduates strengthen our democracy and bolster our economy. They are more likely to vote and are arguably more informed about issues in both historical and contemporary contexts.

College alumni have a higher rate of employment than adults who did not attend college. They also earn more over their lifetimes, meaning they collectively contribute more in taxes and rely less on government welfare services.

According to the American Action Forum, increasing a state's population of college graduates also increases that state's gross domestic product. The Forum report estimates that if the U.S. had increased its bachelor's degree attainment during the 2010s by just one percentage point, this would have added $130.5 billion to the nation's economic growth.

College graduates are also more philanthropic and more likely to volunteer in education, healthcare, arts and culture, and social services.

Education correlates positively with health as well. Educated individuals are less likely to smoke and more likely to have a healthy diet and exercise. As a result, they are less likely to burden the healthcare system and require hospitalization.

Finally, applied research and scholarship, particularly at major universities, aids society in many ways. University research leads to discoveries that cure disease. Research also produces life-saving medical devices and techniques, engineering and technological breakthroughs, and benefits to agricultural industry.

Social science helps us address problems such as hunger, homelessness, crime, climate change, and mental health. Technology transfer partnerships with private industry lead to new startups and create jobs.

Some quibble with the term "public good." Writing in Forbes, Preston Cooper argues that according to economists, a public good must be "nonexcludable" (i.e., the provider cannot charge consumers, such as for a sidewalk) and "nonrivalrous" (i.e., additional consumers don't affect one's experience, as with music downloads).

Higher education doesn't neatly fit that definition. Rather, Cooper says, higher education has "positive externalities," meaning it benefits both society and the individual.

Semantics aside, the extent to which colleges and educated citizens improve society and the human condition cannot be overstated. Yet the belief that higher education is a public good has lost ground over time, creating serious repercussions.

The Shift From Public to Private Good

Today's prevailing wisdom suggests higher education is more of a private good. That shift in public thinking — and in public policy — has occurred gradually over time.

Historian Thomas Adam notes that in the 19th century, higher education was essentially free. Colleges trained teachers, ministers, and other community leaders who served the public good. As such, colleges either charged no tuition or offered ample scholarships. An investment in an individual was an investment in the social fabric.

During the Civil War, Congress passed the Morrill Land-Grant Act of 1862, donating public land to states so they could establish colleges for agriculture and the mechanic arts. This move at once expanded access to higher education and aided a nation on the cusp of a second industrial revolution.

The law, writes Virginia Tech's Chris Davidson, embodied the belief that higher education served the public good.

Adam wrote that after the turn of the century private colleges began attracting wealthy students who valued the experience more for social connections than for the sake of learning.

As self-aggrandizement became the focus, colleges began charging tuition. Stanford, which was free for California residents since its founding in 1891, started charging tuition in 1920. This indicated a shift toward viewing higher education as more of a private, not public, good.

Still, that transformation was gradual, and the federal government continued to support higher education in myriad ways.

Junior colleges, which became community colleges, sprang up across the nation in the early 1900s. Community colleges proliferated after World War II, furthering the democratization begun by the Morrill Act.

Following the war, the Servicemen's Readjustment Act of 1944 — known as the GI Bill® — sent millions of veterans to college on the public's dime. The Higher Education Act of 1965, enacted during the Johnson Administration, sought to expand access to college for low-income students.

The act's reauthorization in 1972 introduced the Pell Grant, the signature scholarship program of the federal government.

Both the 1965 Act and the subsequent Pell addition signaled America's enduring belief that higher education was not a private good reserved for the privileged few. Rather, it was an engine of progress that could serve the public good.

By the late 1960s, though, the shift toward neoliberalism — championed by Governor Ronald Reagan in California — was altering public attitudes toward higher education.

Reagan took a skeptical view of higher education and thought taxpayers shouldn't be "subsidizing intellectual curiosity." The purpose of college was to prepare people for jobs.

Liberal arts education gave way to business studies and vocational pursuits, especially during the economic stagnation and financial insecurity of the 1970s.

By the time Reagan took office as U.S. president in 1981, the nation predominantly viewed college as serving individual interests.

Reductions in Public Funding Lead to Mounting Student Debt

That sentiment persists to this day. A New America survey asked college students why they're in school. Their top answers? To improve employment opportunities (91%), to make more money (90%), and to get a good job (89%).

Contrast that to the 1970s, when three-quarters of first-year students said college was essential to develop a meaningful philosophy of life. Only one-third said the same about being well off financially.

A holistic vision of education has given way to the singular pursuit of economic security.

"Altruistic notions about the advancement of society have generally been pushed aside in favor of the image of college as a vehicle for individual enrichment," Adam wrote.

Higher education today, he contended, "seems to be about what college can do for you. It's not about what college students can do for society."

This fundamental shift in perception has significantly impacted public policy. Federal and state support for higher education has declined since the Reagan administration. Between 1980 and 2001, federal funding for postsecondary education, adjusted for inflation, declined by 33%.

The federal government's focus shifted from providing students with grants to providing them with loans. Adjusting for inflation, federal student debt increased sevenfold from 1995-2017.

At the state level, higher education funding per student is lower today than it was in 1980. Public university leaders often say their institutions have morphed from being state-funded to being state-assisted, and then to being state-located.

During the economic recession that began in 2008, 46 states cut higher education funding. As of 2020, appropriations per full-time equivalent enrollment remained 6% below 2008 levels.

In the 1970s, states subsidized 65% of college costs. By 2013, that share had dropped to 30%.

A 2020 article in the journal of Higher Education Politics & Economics addressed the cultural shift in higher education value.

"With a change in the social value of a degree…shifting from a public good to a personal asset, the public funding model for higher education has constantly reduced each year," the article said.

Colleges, in turn, have transferred the financial burden to students and their families. In half of U.S. states, tuition and fees are the primary revenue source for public higher education. And in seven of those states, the student share exceeds 75%.

As tuition costs have continued to outpace inflation and public funding has dwindled, student debt has risen to $1.7 trillion.

Implications for Public Policy

Viewing college as either a public or private good has implications for issues that dominate today's higher education debates. Should community colleges be free? Should the federal government double the Pell Grant? And should the courts uphold affirmative action?

Some view higher education as a public service that combats multi-generational poverty. Jay Willis, writing in GQ, suggests that these people tend to support affirmative action. Those who see higher education as a private commodity that is bought and sold on the open market generally do not.

The U.S. may never return to yesteryear's vision of higher education as a public good. Still, university leaders can perhaps reposition education's place on the continuum.

Lynn Pasquerella, president of the Association of American College and Universities, wrote about this in the Washington Post.

"While many have acknowledged that higher education is essential to equality of opportunity," Pasquerella wrote, "the reality is that a growing economic segregation in higher education threatens to undermine our nation's historic mission of educating for democracy."