Fresh Cracks in the Divided Welfare State: Student Loans and the Emergence of New Higher Education Policy Coalitions in the U.S.

A much-needed scholarship on the politics of higher education (Stevens, Mitchell L. Gebre-Medhin 2016) should account for the prominent rise of student loans in the U.S. Such research could build on theories of the divided welfare state (Hacker 2002). Towards this end, I compare two major higher education policy coalitions that have emerged since 2010 in response to the rise of student loans. One coalition has focused on state policy in California. The other has focused on federal policy. The emergence of the coalitions shows that the fragmented U.S. higher education system no longer divides higher education benefits between federal and state (Morgan and Campbell 2011), public and private (Hacker 2002), white and non-white (Fox 2010), or targeted and universal (Esping-Andersen 2013).

Fresh cracks have opened according to the extent that different households and colleges rely on student loan financing for post-secondary degree programs. On the one hand, these student loan dynamics widened existing disparities in higher education provision and created new fragmentation. Theories of the divided welfare state imply that these policy developments would have political effects that constrain public benefit expansion (Mettler 2011, 2014; Pierson 1996). Specifically, student loans limit policy add new intermediaries and complexity in the delivery of benefits that make it difficult for beneficiaries and the public to see the importance state policies and enforce accountability.

A new current in theories of the divided welfare state, however, explains why the rise of student loans fueled the formation of new coalitions for expanding public provision (Eaton and Weir 2015). First, subjecting student loan beneficiaries to high levels of individual risk provide fodder for stoking public outrage at students with no options for escaping unpayable levels of debt. Second, the instability of student loan revenue invites coalitions of labor, faculty, and even college executives who push for greater state funding as a more stable alternative. Finally, education unions are threatened by the student-loan fueled rise of non-union for-profit colleges. Consistent with these dynamics, the new student loan coalitions in California and nationally have coalesced student, labor, and progressive organizations as well as college executives at critical junctures.

The policy focus of the two coalitions also reveal that rising student debt has not simply channeled higher education politics towards path-dependent outcomes of privatization and risk-shifting that some theories expect (Hacker 2006). Rather, each coalition responded to the rise of student debts within the earlier frameworks of their respective policy field. In California, the coalition has pushed for policy reversal to restore state funding in place of loan-financed tuition revenue within the framework of California’s 1959 Master Plan. The national coalition has advocated for policy conversion through reduction of student loan interest rates and repayment costs within the 1970s framework of federal aid to support student choice. These proposals are transforming U.S. student loans into a more universal entitlement with rights-based provisions for loan forgiveness and income-based repayment rates. Both coalitions face political and policy opportunities and perils in strategic choices for their agendas.