Opponents of Education Savings Accounts in Iowa have seized on what they apparently believe is evidence that school choice is nothing more than a scheme for Iowa’s wealthy elite to fund their snooty private schools using taxpayer dollars. A recent study from two Ivy League researchers claims Iowa’s 2023 school choice law is directly responsible for tuition increases at private K-12 schools in Iowa.
The working paper, released earlier this month, was prepared by Jennifer Jennings, Professor of Sociology and Public Affairs at Princeton University. Jennings worked with doctoral student Jason Fontana to compare tuition rates at private schools in Iowa from both before and after the passage of ESAs with the same set of tuition rates at private schools in neighboring Nebraska.
Since Nebraska passed ESAs but has not yet implemented its program, the idea behind Jennings and Fontana’s research was that if Iowa’s private tuition rates increased more than Nebraska’s, the conclusion should be that ESAs drive private school tuition higher.
ESAs, commonly referred to as “school choice” by supporters and “vouchers” by opponents, were signed into law by Gov. Kim Reynolds in January 2023. They allow a student’s share of per-pupil state funding, which would ordinarily be sent directly to their assigned public school, to be deposited instead into a special account and used to pay the student’s tuition at an accredited non-public school of their choice. In the 2023-2024 school year, per-pupil funding was $7,635. In 2024-2025, it will increase to $7,826 per pupil.
Through their statistical model, Jennings and Fontana determined that for kindergarten students — the only group for whom ESAs were not subject to income limits for the current school year — private tuition rates went up between 21 and 24% after ESAs passed. For age groups that were subject to income limits for eligibility, the increase was between 10 and 16%.
According to Jennings, an ardent opponent of school choice, those findings indicate “causal evidence” that enacting ESAs prompted private schools in Iowa to hike tuition.
According to Democrats in the state legislature, Jennings’ paper is the only proof anyone needs to confirm that ESAs’ primary effect is to take dollars from public schools to fund private school for rich kids.
I’m not sure the 16,757 Iowa students currently utilizing an ESA to enroll at a school that best meets their needs would agree. Yes, one can argue that two-thirds of those recipients were already attending private schools, thus technically able to afford them before ESAs were enacted.
But those students’ eligibility for an ESA this year was contingent upon a family income limit of 300% of the federal poverty level. I’m not sure what planet one is living on if they consider $90,000 or less for a family of four in inflation-dogged 2023 to be “rich” or “wealthy,” but suffice it to say, this year’s ESA recipients aren’t exactly living in castles.
A few things stick out about Jennings and Fontana’s research. First, the limits of the data themselves: Average tuition increases are calculated using numbers from only half of Iowa’s private schools (51%,) and even fewer (44%) of Nebraska’s. The study acknowledges that the “model sample varies from total sample due to missing data.”
It also appears to have compared this year’s private school tuition rates going back no more than two years, when both public and private schools were still dealing with COVID-19 pandemic-related financial impacts. That could easily skew some numbers.
Leaders from Summit Schools, a private K-8 institution in Cedar Rapids told The Gazette in December that the unusually steep $6,000 increase to the next school year’s tuition is due in part to the school having lowered tuition at the start of the pandemic to help families avoid disenrolling. Almost all of the families with children attending Summit plan to keep their children enrolled after the tuition increase. The school also has a waitlist larger than the current total enrollment.
So Jennings and Fontana’s numbers may come with caveats the research doesn’t necessarily explain. They also neglect to mention another important detail: that even after the increases in private school tuition rates as they’ve calculated them, the average tuition at a private school in Iowa this year was significantly lower than the $13,838 Iowa spends per student in state and local funding.
How were private schools previously able to operate if their tuition was — and in many cases, still is — so much less per student than public school funding? By delivering their product — a premium quality education — according to what the market both allowed and required of them. It’s why Jennings and Fontana’s conclusion that increasing tuition could defeat the purpose of ESAs and price students out of private schools rings hollow. They contend that if private schools raise their tuition, ESAs could have no effect beyond that of “tuition subsidies for families who can already afford private school.”
But school choice has unlocked a revenue stream driven by previously unrealized demand. It would make absolutely no sense for private schools to eliminate that demand by raising tuition beyond what ESA recipients can afford. By doing so, a private school wouldn’t just price those students out of enrolling, it would risk pricing itself out of existence. In the free market, this very concept is known as a price point: the magic number likely to yield the desired revenue while maintaining demand.
It’s perfectly plausible that the price point of private schools has ticked up now that demand has increased. But that price point still remains quite reasonable. It will stay that way as long as private schools desire to keep their students from taking their education dollars elsewhere. Welcome to the free market, Iowa students.
That’s not to say no one should be concerned with an influx of money driving up the cost of a product or service. Nobody can escape economics. But when it comes to education, the tuition inflation Jennings and Fontana warn about with ESAs is happening elsewhere and having a far more disastrous effect than pricing students out of a quality K-12 education.
Our current higher education lending system — aka student loans — does the opposite. Instead of pricing students out of school, it locks them into decades, if not a lifetime of debt to bear the cost of attending that school. But while K-12 education funding is a nation and a state’s offering for the foundation of a child’s learning, student loans were intended to be financing repaid by the adult scholar.
The K-12 education market is recalibrating to accommodate funding that is new and equal among students. Student loans have for decades now been driving up the cost of higher education by providing a supply of credit with borrowing limits that can reach sky-high amounts. As a basis for their research into ESAs in Iowa, Jennings and Fontana touch on this issue, summing it up in what’s called the “Bennet hypothesis,” named after former Secretary of Education Bill Bennet, who said, “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase,”
Bennet’s remark was made in 1987. Not only does the problem of generous college financing continue to drive up the cost of higher education, it transfers the cost of that education to the taxpayer, including and especially costs incurred at private colleges. It’s downright mystifying that the typical opponent of K-12 school choice does not seem as offended by that as they are by ESAs. Especially since blanket student loan forgiveness attempts by the Biden administration — including another 7.7 billion for 160,000 borrowers announced just last week — could easily (if rejected in court) cost Iowa taxpayers more than they will ever pay for ESAs.
The K-12 education landscape in Iowa is changing. Believe it or not, these changes were intentional. They were supported by voters who elected legislators who ran on a school choice platform, and when they delivered, thousands of Iowans said, “Sign me up.” They don’t need an Ivy League study to tell them what they already know: The market for K-12 education in Iowa is wider and freer than ever.
Comments: 319-398-8266; althea.cole@thegazette.com
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