Mo Money Mo Problems (Mo Details)


How much does America spend on Education?

For this episode of Get Schooled, I wanted to figure out one big, bad reason behind our broken education system. So far, we’ve talked about teachers, testing, and bilingual programs - all of these are part of the puzzle, but I wanted to find the biggest piece.

My first guess when trying to figure out why our education system is such a dumpster fire was: money. As a country, we don’t invest enough money in education, at least not as much as Finland and the Netherlands, we don’t invest enough money in our teachers, we don’t invest enough money in resources. In fact, I had already made up my mind that money was the problem, the question, and the answer.

I was wrong.

I was at least partially wrong. The Organization for Economic Co-operation and Development, or OECD, is an organization with 35 member countries, including Scandinavian nations and the United States, that works “with governments to understand what drives economic, social, and environmental change”. They analyze tons of data across 35 countries and compile reports, including ones on education. Their 2017 Education at a Glance report really derailed my whole “money” assumption.

Thanks to their report, we can see America’s expenditure on educational institutions per student, per program, and as a percentage of national spending.

Before we get into some important potentially shocking facts, I want to clarify two key things.

First of all “expenditure”, in the OECD report, refers to public and private funding. So, for our purposes, this means it includes all the money that the government funnels into education, but also how much our households - you, me, our families - spend on school. Private spending on education loosely involves how much we pay out of pocket to go to school.

Private spending on education loosely involves how much we pay out of pocket to go to school.

Second, “educational institutions” is all-encompassing. This means we’re talking about K-12 programs, undergrad, and post-grad and beyond. This is referred to as primary, secondary, and tertiary education. I’m sure you’re familiar with the terms “primary” and “secondary”, but before we go any further, I want to explain what tertiary education means. Tertiary education is the highest possible level of study in your field. For example, if you’re studying to be a doctor, med school is your tertiary education. If you’re trying to be a lawyer, law school is your tertiary education. This is about to be really important in sharing with you three facts.

Tertiary education is the highest possible level of study in your field.

Here are some facts.

Fact #1.

Contrary to what I believed, In 2014, the US had the third largest annual expenditure by educational institutions per student of any OECD country, and the fifth biggest spender when it comes to proportion of national wealth spent on education institutions.

So, in our whole primary through tertiary education journey, we as a nation spend around 12,000 per student, beating out Finland, the Netherlands, and everyone excluding Switzerland and Luxembourg. In 2014, we spent a little over 6% of our GDP on education (4% public, 2% private).

But it’s not that simple.

Fact #2.

The divide between money spent on tertiary vs. non tertiary education is massive. In fact, a reason we spend so much on education is because of expenditure on tertiary programs.

I was completely shocked to see the discrepancy between the two. The U.S. is number one out of ALL OECD countries when it comes to % of GDP spent on spending on tertiary spending. However, we are below the OECD average for primary and secondary education. In fact, we’re in 20th place, out of 25 countries.

Think about this for a second: We’re #1 in tertiary spending, and #20 in non-tertiary spending. Somehow, we’re still top 5 in the proportion of our national wealth spent on education.


Fact #3.

Tertiary education is really damn expensive for you and me. I’m not saying that the government is investing a lot into our tertiary education programs. A little over 2.6% of GDP in 2014 goes toward tertiary education spending, and the government only spends about 1%. This means that private institutions, including households, spend more than the U.S. government does on the highest levels of education. We pay a lot, out of pocket, to go to med school, law school, and a lot of post secondary programs.

private institutions, including households, spend more than the U.S. government does on the highest levels of education.

So I guess, circling back to my original assumption, it’s not that America as a whole isn’t spending enough money on education, it’s that we the people, private institutions, are pulling more weight than the government of the United States of America to send ourselves to school.

Okay, so what?

We already sort of knew that - higher education in the United States is expensive, and it’s a screwed up system.

Here’s the thing though -- this affects every single listener, because this is representative of a much bigger problem.

income inequality.

According to a study by the Pell Institute,

“When American households are organized into four income groups, 24-year-olds from the top two groups accounted for 77 percent of the bachelor’s degrees awarded in 2014. In 1970, that figure was 72 percent, suggesting that growing up in a wealthier household matters even more now in completing a degree than it did four decades ago.”

Combining OECD insights with the Pell report, as a nation, we spend a lot on higher education, and the way we do it poses a terrible cost on our society. Here’s my personal take.

I believe the costs of inequality and inequity are too great to ignore, and honestly, most of us -- 99% of us -- aren’t in a position to ignore them.

Not even the privileged are safe

I grew up in a fairly privileged world and didn’t know much about inequitably distributed opportunity, and honestly didn’t see why it affected me.

But in 2008, the recession hit my family, and for the first time, at 13 years old, I realized that almost no one is immune to the wealth gap.

Since 2008, it was hard finding sources of income for my family, despite the fact that my parents both held multiple degrees. Prior to the recession, for as long as I could remember, my mom has been either staying home or working as a teacher, and my father’s been a successful Silicon Valley tech professional. We were “Silicon Valley lower middle class”, which in most parts of the country, would translate into being rich. I’d never had to confront social issues or poverty, and never imagined I’d be in a place where I’d have to choose a college based on cost.

But my father spent the majority of my high school years, from 2009 to 2013, looking for a permanent job. If he hadn’t started saving money for me to go to college from the time I was born, I don’t think I’d be in the same place I am today. I consider myself very, very lucky to go to the school of my choice and graduate without thousands of dollars in debt, but unfortunately, my privilege does not represent American opportunity.

what this means for society

Unfortunately, here’s what this looks like on a larger social level. According to Robert Putnam, professor of Policy at Harvard Kennedy School,

“Smart poor kids are less likely to graduate from college now than dumb rich kids. That’s not because of the schools, that’s because of all the advantages that are available to rich kids.”

Wealth, not merit drives education. Wealth drives education which drives access to jobs, political capital, influence, and credibility - and this wealth is assigned to only a select few. If you don’t already have it, odds are, you’re never going to get it.

So family wealth and education opportunity are inextricably intertwined. If we’re interested in having a society that produces the most competent doctors, lawyers, educators, and next generation of politicians equipped to make intelligent, effective decisions, it’s critical that we recognize that America’s spending must be used to create opportunity, not destroy it.

Nivi Achantaeducation, budget