Newt's Different Approach to School Vouchers

Over the past week, Newt Gingrich has caused an uproar among liberals in the media for saying that "really poor children in really poor neighborhoods have no habit of work."  His solution is straightforward: he believes that work-study programs should be implemented in poorer sectors of the public-school system that would hire students to do the janitorial duties of upkeep and maintenance.

 

Liberal commentators predictably attacked the former speaker of the House -- one of them laughably called the idea "Newt's War on Poor Children" -- without actually engaging with whether his idea would work.  However, while Newt is offering a different solution to a common problem, he, and other conservatives, could go farther by striking at the heart of the issue: the fact that, unlike many middle- and upper-class students, the poor in our country are not empowered to choose their school.  Furthermore, despite aid programs, the poor who do go to college often feel constrained by the ever-rising cost of tuition in higher education, which leads to these same students often dropping out.

 

A while ago, the Center for Freedom and Prosperity released another of its Econ 101 videos.  This time they detailed how monopolies within the American primary and secondary public education system stymie progress and advancement for many of our students in the United States.  This idea is not new.  For decades conservatives have discussed the problems created by the public education monopoly.  Too often, however, conservative reformers have ended their efforts prematurely, settling for higher SAT scores and high-school graduation rates as a signs of success.  We should go beyond that.  Conservative reforms should work to raise the level of college graduation in the United States instead of assuming that higher test scores and more high-school diplomas lead to a better educational system.  School vouchers combined with low-risk education accounts can achieve this goal.

 

Conservatives have shown that private schools do more with less when compared to public schools because competition forces better performance.  Unfortunately, studies have also shown that good test scores, GPAs, and high school graduation rates do not necessarily ensure college diplomas for low-income families, thus perpetuating the cycle of poverty in many urban areas where these poor families live.  In 2005, the Education Policy Institute found that only 29 percent of the highest achievers in low-income households obtained a bachelor's degree. 

 

In the book Crossing the Finish Line: Completing College at America's Public Universities, William G. Bowen, Matthew M. Chingos, and Michael S. McPherson have identified "under-matching" as a major problem for low-income students.  The New York Times reported that under-matching "refers to students who choose not to attend the best college they can get into. They instead go to a less selective one, perhaps one that's closer to home or, given the torturous financial aid process, less expensive."  The authors argue that the more selective the college, the more likely the student is to graduate.  As students from poor backgrounds choose less selective schools because of financial concerns, they become less likely to graduate than those students who attend highly selective colleges and universities. 

 

A voucher system that includes low-risk education savings accounts offers a way for low-income households to save money for college.  The Institute of Education Science, part of the U.S. Department of Education, released a report stating that, on average, public schools spend $11,257 per student, while private schools spend only $8,549, a difference of $2,708 a year.  The problems of financial need for college could be simplified if students in low-income households and failing school districts were given that $11,257 to use at their discretion.  Many students could save a portion if they could find a school they wanted to attend for under the voucher amount.  They could then place those savings into a low-risk education account that would accrue interest and be used for higher education costs down the road.

 

This plan is straightforward.  If a low-income family with a kindergartener in a failing school received a $10,000 voucher -- $1,000 lower than the average cost spent per student by the government -- to choose a school of their choice and they paid the average private-school tuition ($8,500), they could then place the remaining $1,500 in a low-risk savings account accruing minimal interest in the name of the student that could be spent in future tuition.  If $1,500 could be saved every year for twelve years with a 2-percent interest rate on the investment, that student would accumulate roughly $22,500 to spend on college.  If the family saved $2,000 a year from their school voucher, the student would have almost $30,000 to spend on postsecondary education.

 

The money saved in the education account would always be the student's.  If the student received an undergraduate scholarship or financial aid of some kind, he or she could then spend the money on graduate or vocational work.  If the voucher savings still had not been spent at the age of 50, the money could be rolled over into a retirement account.  Either way, students would be saving for or investing in their future.

 

We currently live in an era where a liberal president now openly states his belief in top-down, "progressive" government.  Conservatives have the opportunity to explain how markets and competition work in favor of people, helping them rise from poverty by creating economic growth.  The education system is a perfect place to implement market-based reforms that will give Americans a firsthand example of why our system works so well.  School vouchers, in combination with low-risk education savings accounts, would attack the problem of "under-matching" and raise the graduation rate in America's universities, so often considered the envy of the world.

 

Carl Paulus will receive his Ph.D. in American history from Rice University in May 2012.

Over the past week, Newt Gingrich has caused an uproar among liberals in the media for saying that "really poor children in really poor neighborhoods have no habit of work."  His solution is straightforward: he believes that work-study programs should be implemented in poorer sectors of the public-school system that would hire students to do the janitorial duties of upkeep and maintenance.

 

Liberal commentators predictably attacked the former speaker of the House -- one of them laughably called the idea "Newt's War on Poor Children" -- without actually engaging with whether his idea would work.  However, while Newt is offering a different solution to a common problem, he, and other conservatives, could go farther by striking at the heart of the issue: the fact that, unlike many middle- and upper-class students, the poor in our country are not empowered to choose their school.  Furthermore, despite aid programs, the poor who do go to college often feel constrained by the ever-rising cost of tuition in higher education, which leads to these same students often dropping out.

 

A while ago, the Center for Freedom and Prosperity released another of its Econ 101 videos.  This time they detailed how monopolies within the American primary and secondary public education system stymie progress and advancement for many of our students in the United States.  This idea is not new.  For decades conservatives have discussed the problems created by the public education monopoly.  Too often, however, conservative reformers have ended their efforts prematurely, settling for higher SAT scores and high-school graduation rates as a signs of success.  We should go beyond that.  Conservative reforms should work to raise the level of college graduation in the United States instead of assuming that higher test scores and more high-school diplomas lead to a better educational system.  School vouchers combined with low-risk education accounts can achieve this goal.

 

Conservatives have shown that private schools do more with less when compared to public schools because competition forces better performance.  Unfortunately, studies have also shown that good test scores, GPAs, and high school graduation rates do not necessarily ensure college diplomas for low-income families, thus perpetuating the cycle of poverty in many urban areas where these poor families live.  In 2005, the Education Policy Institute found that only 29 percent of the highest achievers in low-income households obtained a bachelor's degree. 

 

In the book Crossing the Finish Line: Completing College at America's Public Universities, William G. Bowen, Matthew M. Chingos, and Michael S. McPherson have identified "under-matching" as a major problem for low-income students.  The New York Times reported that under-matching "refers to students who choose not to attend the best college they can get into. They instead go to a less selective one, perhaps one that's closer to home or, given the torturous financial aid process, less expensive."  The authors argue that the more selective the college, the more likely the student is to graduate.  As students from poor backgrounds choose less selective schools because of financial concerns, they become less likely to graduate than those students who attend highly selective colleges and universities. 

 

A voucher system that includes low-risk education savings accounts offers a way for low-income households to save money for college.  The Institute of Education Science, part of the U.S. Department of Education, released a report stating that, on average, public schools spend $11,257 per student, while private schools spend only $8,549, a difference of $2,708 a year.  The problems of financial need for college could be simplified if students in low-income households and failing school districts were given that $11,257 to use at their discretion.  Many students could save a portion if they could find a school they wanted to attend for under the voucher amount.  They could then place those savings into a low-risk education account that would accrue interest and be used for higher education costs down the road.

 

This plan is straightforward.  If a low-income family with a kindergartener in a failing school received a $10,000 voucher -- $1,000 lower than the average cost spent per student by the government -- to choose a school of their choice and they paid the average private-school tuition ($8,500), they could then place the remaining $1,500 in a low-risk savings account accruing minimal interest in the name of the student that could be spent in future tuition.  If $1,500 could be saved every year for twelve years with a 2-percent interest rate on the investment, that student would accumulate roughly $22,500 to spend on college.  If the family saved $2,000 a year from their school voucher, the student would have almost $30,000 to spend on postsecondary education.

 

The money saved in the education account would always be the student's.  If the student received an undergraduate scholarship or financial aid of some kind, he or she could then spend the money on graduate or vocational work.  If the voucher savings still had not been spent at the age of 50, the money could be rolled over into a retirement account.  Either way, students would be saving for or investing in their future.

 

We currently live in an era where a liberal president now openly states his belief in top-down, "progressive" government.  Conservatives have the opportunity to explain how markets and competition work in favor of people, helping them rise from poverty by creating economic growth.  The education system is a perfect place to implement market-based reforms that will give Americans a firsthand example of why our system works so well.  School vouchers, in combination with low-risk education savings accounts, would attack the problem of "under-matching" and raise the graduation rate in America's universities, so often considered the envy of the world.

 

Carl Paulus will receive his Ph.D. in American history from Rice University in May 2012.