Guess Who Pushed for Universities to Cost More?
Charles Koch did. Who opposes student loan debt forgiveness? Koch-funded groups do. Surprise, surprise, surprise...
It’s August, but we’re not ready to head to the cool woods for a summer vacation yet.
Instead, we’ve got new revelations in part three of our investigation of the roots of student loan debt. That includes the truly shocking truth that Charles Koch’s fledging public policy shop spent a lot of time pushing for public universities to cost more, a lot more.
We also share how one Koch-funded women’s group is attacking Biden’s efforts to redress the student debt crisis and has been attacking efforts to mitigate it for years.
We also feature an interview with an inspiring teacher, Marisol Garcia, who is working on the front lines of efforts to protect public school students and their futures.
And we also highlight a new must-read story, along with a must-sing-along song we simply love.
Thank you for tuning in! —Lisa
Investigative Series: Charles Koch and the Roots of the Student Debt Crisis
Part 3, Charles Koch’s Push for Corporate Colleges and for Making Public Universities Cost More
By Caroline Jones and Lisa Graves for True North Research and the BOLD ReThink
The student debt crisis is the result, in part, of public policy preferences pushed decades ago by free market fundamentalists like the economist Milton Friedman and Charles Koch, as described in the first installment of True North Research’s student debt crisis report.
Our second installment detailed ways in which Friedman and Koch talked about publicly-funded universities and private ones, rooted in an anti-government agenda that has resulted in saddling generations of Americans with student loan debt that Friedman and Koch never had to worry about themselves.
Fifty years ago, when a public university education was affordable to many students, Charles Koch and his lieutenant George Pearson examined college education and concluded that that public universities cost too little.
Like Friedman, they also lamented that the existence of publicly-funded universities created unfair competition with private colleges and they argued that higher education for Americans should not be subsidized by taxes.
In this week’s installment, we chronicle the activities of the Center for Independent Education — Charles Koch’s first known non-profit, which he ran with Pearson — as a vehicle for attacking the idea of low-cost public universities and for promoting student debt.
Charles Koch’s First Known Non-Profit Attacked Public Schools and Colleges
The first non-profit Charles Koch launched on his own was called the “Center for Independent Education” (CIE), which began operating out of Koch Industries’ headquarters in 1968. Before helping to create CIE with Pearson, Koch was actively involved in leading and funding both the radically reactionary Freedom School and the extremist John Birch Society.
(Notably, Koch resigned from the John Birch Society in 1967 due to its views in favor of the Vietnam War, but not over its years of relentlessly attacking the civil rights movement, Rev. Martin Luther King, Jr., and Rosa Parks.)
CIE’s purpose could most simply be described as a vehicle to attack public education—primary, secondary, and college or post-secondary—although it claimed to be focused on strengthening education. Its mission statement asserted that "[m]any persons have misgivings about the values inculcated by the state schools and increasingly find in them only more government controls and chaos in educational standards.”
Koch placed his own administrative assistant, Pearson, in charge of operations. Publishing and distributing articles were the primary activities of CIE. Excerpts of these materials reveal Koch’s multi-pronged attacks on the idea of public funding of education and his preference for the private sector at every turn.
Through the newly established Reason magazine and the Libertarian Party (which was launched in 1971), CIE advertised numerous pamphlets attacking public schools and public universities.
In fact, as True North Research, In the Public Interest, and the BOLD ReThink documented last year, Koch,Pearson, Koch Industries, and CIE were early and key funders of Reason magazine as it expanded its operations in the 1970s and 1980s.
As we documented:
“In 1970, MIT engineer Robert Poole bought Reason [which] needed ad revenues to survive, and it turns out Koch supplied a substantial portion of them along with loans. It was Koch who staked Poole at the fledgling Reason in the early 1970s….”
Poole later acknowledged: “‘In the first few years of Reason’s California existence, one of its important sources of security was the long-term commitment of advertising by the Institute for Humane Studies and the Center for Independent Education. Ken Templeton, George Pearson, and Charles Koch of those institutions have been loyal friends and supporters over the years.’”
During this period, Reason promoted numerous public policies he favored, as described in more detail below.
Koch Urged Corporate Universities to Train Workers, Not Public Funding
The very first report published by CIE was one Koch co-authored with Pearson, which was published both by CIE and in the libertarian magazine The Individualist. In that piece, Koch and Pearson argue that:
“[T]here is no reason why the taxpayer, wealthy or destitute, should be burdened with the financial responsibility of training and educating the future employees of industry … with innovation sadly lacking in education, the examination of a successful unconventional educational institution is in order.”
That special report seemingly channeled Friedman’s original thesis against taxpayer subsidized universities.
It also focused on General Motors’ training college as a model for how universities should operate: the future corporate employer subsidized the education of students, who worked for the company at low wages as apprentices and studied under teachers without tenure.
Koch and Pearson also theorized that because the students were training for employment, there would be less activism or civil disobedience during a period when students were actively holding sit-ins for racial equality, rallying against the Vietnam War, and demanding new environmental laws.
Koch’s Operation also Embraced Long-Term Student Debt to Fund College
In addition to supporting corporate colleges, Koch’s operative Pearson endorsed student debt as an alternative way to fund college educations.
This endorsement was in response to Reason magazine’s embrace of “Pay As You Earn.” In June 1971, Reason noted that “a proposal is being tested that points the way toward a radical restructuring of higher education funding which could eliminate the conventional justification for taxpayer support.” (emphasis added)
Reason elaborated:
“The plan is called PAY AS YOU EARN (PAYE) and was first proposed ten years ago by Dr. Milton Friedman. It rests, essentially, on two principles:
(1) that the fundamental responsibility for paying for college-level education should rest with the customer (the student) and
(2) that education should be priced at a level that fully covers the cost of the service provided ("full-cost pricing"), rather than being subsidized by foundations, research grants, or taxpayers in general.”
Here’s how it described this radical restructuring:
“Basically the plan calls for a college or group of colleges to raise tuition to the full-cost level and set up a massive loan plan available to (and needed by) most of the students. The unique feature of the plan is that repayment of the loans would be during a very long time period (30 to 35 years), based on a small fraction (e.g., 0.4%) of the student's annual salary.” (emphasis added)
Reason noted that two private universities, Yale and Duke, were experimenting with a form od PAYE by creating loans poor students could pay off over decades of work. Thus, Friedman was no longer alone in advancing his free market fundamentalism for universities, with two Ivy League schools jumping on board and the Ford Foundation, whose goals were for loans to help fill the gap in public funding to meet tuition costs.
However, Reason’s interests were rooted in hostility to public funding for public universities, unlike Ford or those two Ivies. Reason trumpeted that the student debt proposal “could well signal the death of tax-financed universities and thereby the beginning of the separation of Education and State….”
In response, Pearson wrote to Reason and stated: “I think the PAYE plan is a market answer to the problem of students who wish to attend college but cannot immediately afford to.” He objected, however, to the idea that “‘most students’ should have a college education.” He also touted the idea that corporations can “play a large role in funding college education” for their future employees. Additionally, he promoted the CIE’s report he and Charles Koch wrote on GM’s college as a model for how university education could be funded.
Pearson also asserted to Reason and its readers that:
“PAYE is only one of the many solutions that the market would provide. That attending college is a waste of time for many and that sources of corporate financing of education would open up a market could be equally important in the market's functioning to provide education.”
Koch’s role in promoting the conditions that have helped create the student loan debt crisis involved much more than just a single letter to the editor. He was underwriting a magazine that helped amplify his opposition to public education, and much more.
(Notably, Friedman’s PAYE proposals pre-dated a proposal with the same acronym pushed a decade ago in the Obama Administration as a way to reduce student debt.)
Koch’s Operation Repeatedly Urged Higher Tuition through “Full-Cost Pricing”
In the same period, Koch’s CIE railed against public universities and pressed for “full-cost pricing” of public university tuition, an attempt to popularize Friedman’s theories.
Koch’s CIE ran ads in Reason and other outlets promoting pieces pushing for public universities to charge students “full-cost pricing.” Like Reason magazine explained, this was supposedly necessary to help eliminate tax subsidies for university education and also protect private universities from unfair competition by government-funded colleges.
That was not the norm in the U.S. educational system at the time. The trend was in the opposite direction, with the passage of the Higher Education Act in 1965, whose goal was “to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.”
In the early 1970s, as Koch’s CIE launched its attacks, public universities were well funded by state budgets with low-cost tuition for state residents. Many students could afford to attend universities and pursue graduate degrees in medicine, law, and other fields, with a small amount of help from their families or part-time jobs during school or the summer, for example. They could graduate without being saddled with debt that cut into their income for years and decades to come. They could also pursue work without the kind of pressure that steers people away from public interest jobs and into work for corporations to provide higher income to make student loan debt payments.
Koch’s CIE repeatedly pushed “full-cost pricing” of college tuition, limiting public support for higher education, which would result in fewer students going to college and decades of debt for students whose families did not have the wealth to pay high tuition costs.
Several of the pamphlets CIE sold through Reason magazine and other libertarian outlets attacked low-cost or free tuition. These include:
“The Economic and Social Cost of Free Tuition,” by Armen Alchian, which endorsed student loans to cover “full-cost” tuition and opposes public funding for low or no tuition through taxes as an improper and undesirable redistribution of wealth.
“Financing Private Education in the United States,” by Benjamin A. Rogge, which also supported “full-cost” tuition and opposed “below-cost” or free tuition and contended that: “In sum, the argument that higher education must receive public subsidy to assure equality of income-earning possibilities is questionable in both theory and practice. There is no clear evidence that a formal, college education is itself a cause of higher lifetime earnings. But if it could be proven, it would establish not a need for public subsidy, but rather a need for an improved capital market to permit students to pay for their school out of the higher earnings produced by that schooling” (emphasis added).
“The Political Economy of Modern Universities,” by Henry G. Manne (who later became the Dean of George Mason University’s law school, the recipient of millions of dollars from Charles Koch and the Koch family fortune), which also criticized “below cost” tuition at public universities, claimed that public subsidy was unfair to private universities, and also asserted that public subsidy (purportedly unwisely) limited the influence of donors over university education.
Koch’s CIE also promoted bibliographies of articles promoting full-cost pricing of universities and used unrest at universities as a rationale for changing how universities are structured, including how they were funded, as illustrated below:
Other Examples of Charles Koch’s Attacks on the Funding of Higher Education
CIE also promoted a book-length essay co-authored by James Buchanan titled “Academia in Anarchy.” Buchanan specifically cited the student anti-war protests of 1970, calling them “the insanities of May 1970,” as evidence that “[t]he financing of education should be shifted away from free-tuition in the direction of full-cost pricing” in part to prevent such student protests—that is, dissent—in the future.
Buchanan was later identified by Duke history Professor Nancy MacLean as an “intellectual linchpin of the Koch-funded attack on democratic institutions.” In her bell weather book, Democracy in Chains, MacLean discussed that piece along with numerous other articles and activities by Buchanan that advanced or aligned with Koch’s policy and political agenda.
Buchanan also pressed for the “strict enforcement” of the“laws of conduct and behavior” in order to quell these uprisings. Among other things, Buchanan questioned "[i]f universities continue to move more and more toward becoming centers for revolutions against the very society that nurtures them, will society continue to finance them?”
—
Next week, Part 4 in this series examines the “Powell Memo” and how Charles Koch argued that it did not go far enough in using corporate funding of universities to exact control over what is taught, and more. August is the 50th anniversary of that memo, which has had numerous destructive consequences to the health of American democracy, including its impact on public universities and schools.
Please tune in next week for Part 4 of the roots of the student loan debt crisis.
The Koch-Funded Independent Women’s Forum Opposes Student Loan Debt Relief, of Course
By Lisa Graves, with research from Evan Vorpahl
Several Koch-funded groups oppose any effort to address the student loan debt crisis through loan forgiveness, including the Independent Women’s Forum (IWF).
IWF’s reps have previously tried to claim it has no recent funding from the Koch family fortune or Koch’s groups, but documents obtained by True North Research demonstrate that is not true. The ties between Koch and IWF run deep—the group was previously led by the former top lobbyist for Koch Industries, Nancy Pfotenauer, who for years operated IWF alongside a key part of the Kochs’ grassroots political operation, Americans for Prosperity/Citizens for a Sound Economy.
What is IWF’s position of student loan debt? It has opposed an array of proposals to forgive even a portion of student loan debt, proposals it claims are “regressive.”
Its operatives have also attacked President Biden’s proposal to make community colleges free. Such attacks are claimed to be based on concerns about “runaway spending,” but fears about the growing the federal deficit were not stoked by IWF when Trump signed into law Charles Koch’s massive “once-in-a-generation” tax cut agenda, as reported by Lee Fang and Nick Surgey. (Graves co-founded Documented Investigtions with Surgey.)
IWF—which got its start defending Clarence Thomas despite evidence he sexually harassed Anita Hill while he led a civil rights office in the Reagan Administration—has also blamed women, who hold the majority of student loans, for the student debt crisis. For example, IWF asserted: “It would be nice, if, for a change, women stopped blaming society for their less-than-wise decisions about college and career, and then expecting society to pick up the pieces, they took the responsibility for making wiser ones.”
IWF even suggested student loan debt was driving a growing trend of “Female Grads Selling Sex to Pay Down Student Loans.”
Given IWF’s track record, it should come as no surprise it also used the issue as an opportunity to claim that college costs are rising due to “diversity administrators.”
It also used the issue to reiterate its repeatedly debunked assertion that there is no need for Equal Pay laws because, in its views, any pay gap is due to women’s choices.
Here’s one such example of some of the gender stereotypes peddled by IWF:
“Within employment sectors, men gravitate toward high-paying specialties, while women may focus on areas that are more fulfilling or more flexible, but less remunerative. Is someone holding a gun to college women's heads and forcing them to major in Third World Literature? Women are constantly whining about there not being enough of them in STEM careers–so how about ‘funneling’ themselves into one of those remunerative science and engineering majors? And, right, ‘fulfilling’ jobs often come at a price–a salary price. You can't have everything.”
It may seem funny that a women’s group would spend so much time opposing legal equality for women, equal pay laws, and paid Family and Medical Leave proposals, but it is not actually funny at all.
Check out some of IWV’s recent funders, who have helped underwrite its quite un-funny agenda (view the snapshot of recent IWF Gala funders below). As you can see, it is not just the Koch fortune. What were Facebook, Google, and other public corporations doing underwriting a group with a reactionay agenda like IWF?
Boldly Rethinking
A conversation with Marisol Garcia, vice-president of the Arizona Education Association
This session of BOLD ReThink’s Dialogues for Democracy is a conversation between True North’s Lisa Graves and Marisol Garcia, the vice-president of the Arizona Education Association. Marisol has helped lead a New Vision for Arizona Schools, an aspirational roadmap roadmap for true equity in Arizona schools during the pandemic.
Here is a brief excerpt of that dialogue:
MG: It's been a hard year for educators, a hard 18 months, right. A lot of us who are parents and have had children, had to deal with distance learning and in person learning back and forth. A lot of us have family members who have been sick and Ill. We've had a lot of members who have been ill and, and then passed away.
So this has been a very tough time to be an educator and and I use that term educator full scope, right? Because some of our members who are not classroom, teachers are truly frontline workers, who have been in buildings when it was unclear, how the virus was being spread, but they were making sure students had hot spots and computers and lunch and breakfast and even weekend food prior to there being any sort of plans that was the first triage that needed the to get done for communities and it could lead back to educators.
LG: … Charles Koch has really been working to try to privatize public education for decades now and has … pushed a lot of measures to make it harder to fund public schools, to have budgets that actually work for the American people to make sure that we have great schools and great public services.
And I understand that one of the things you're contending there within Arizona is a flat tax and a sort of revenue structure that failed in Charles Koch’s home state of Kansas. Now, Charles Koch, of course, is the billionaire, one of the richest guys on the planet who runs one of the wealthiest corporations in the history of the world and his home state sort of has adopted some of his economic ideas and it has just really tanked the Kansas economy. Is that something you're facing there in Arizona as well?
MG: Yes, the new, the current proposal, which is being supported by our governor is a flat tax … It will for sure allow a broader level of tax cuts for the wealthiest one percent.
And for normal people, you know, middle class teachers are the low end of the middle class, we will maybe see $30 a month that we might get back. We have a potential of a 1.5 billion dollar tax availability coming forward and what they're wanting to do is eliminate that by offering this tax credit and tax break [to the] top one percent.
And coming out of Covid, especially in the schools, we see this budget as an opportunity for funding special education, lowering class sizes, hiring nurses, and restructuring schools so that they have cleaner air, hiring librarians, technology, aides. Everything that we know the kids need, this is every opportunity is about to be swept away all because of this kind of potential idea that we know didn't work in Kansas.
… [Also] I live in a predominantly, you know, black and brown community, and what you see, almost on every corner, is a new charter school popping up. And our concerns with charter schools is that they're labeled public schools because they are given public funding. However, none of them have democratically elected governing boards, which should be an initial trigger for any family member. That if my child has an issue, or if they are hurt at school or if they have concerns about their student learning, there isn't a chance to vote someone out or vote someone in, right?
This is a business model in which there is literally a CEO. And in Arizona, they've weakened the fact that a lot of the charters don't have to be credentialed people [to teach kids]….
LG: One of the things that I've seen in my work is how much groups like the Koch-funded ALEC, which is the American Legislative Exchange Council, have really worked to undermine public schools, take money out of our public schools, put it into private hands, and also try to really distort the curriculum.
You know, at one point ALEC was trying to push the legislators to try to talk about balance on climate change despite the weight of the science that climate change is, in fact, happening. And we've also been seeing other groups like the Heritage Foundation, which also has had Koch funding, pushing some of these agenda items … that really inhibit … the importance of teachers being able to have honesty in education, to be able to teach students the facts: science, math, history. I wonder if you could talk a little bit about the dynamics of groups like ALEC in your state.
MG: Yeah, I mean, we've seen a just all of a sudden almost roving groups going from school board to school board, demanding that we as educators change curriculum to teach specific things and not teach specific things and they use the term “controversial issues.” And to me, it's kind of like “all of history is controversial, right?” Like things happen. They weren't great. We learned from it. We adapted, we changed. [I]n my classroom, I always have the sign up that says “look to the past, be aware of your current state, and be ready for the future’ because we can't pretend the past never happened. And I think we also shouldn’t take away a student, especially a student of color’s, ability to see themselves in history…
Watch the full conversation here and follow us on Facebook to join the dialogues!
The Shot
Meanwhile, the “audit” of the ballots in Maricopa County, Arizona—instigated by the state’s right-wing legislature, outsourced to a dark money group called “Cyber Ninjas,” dubbed a #fraudit, and denounced as a total farce—has been investigated by the great investigative journalist Jane Mayer in this month’s New Yorker.
Check it out to learn more about the handful of uber-wealthy people and groups that have been funding the hype around voter fraud (which True North Research calls Donald Trump’s most “lucrative lie”).
Mayer’s reporting tells a truly eye-opening and jaw-dropping story.
The Chaser
When I think about the well-funded PR machine spreading corrosive lies about voter fraud, lies that weaken our democracy, I think of Nancy Sinatra singing these lyrics:
“You keep lyin' when you oughta be truthin'
And you keep losing when you oughta not bet
You keep samin' when you oughta be a'changin'
Now what's right is right but you ain't been right yet
These boots are made for walkin'
And that's just what they'll do
One of these days these boots are gonna walk all over you…”
You know you want to sing along! Tune in next week for more research that exposes the bad guys and bad gals who we think are undermining our democracy.