When I lecture on campuses, students often express dismay about special interests descending on government. They worry that bailouts like AIG’s show that corporations are in bed with government and that the Supreme Court’s Citizens United decision will unleash more corruption.
Yet as governments in California and elsewhere cut subsidies to public universities and raise tuition, students rally in protest—and become one more special interest jockeying for position.
There has to be a better way. To find it, consider the source of warring special interests.
War is inevitable the moment we accept the idea that there’s a right to a university education, a business that cannot go bankrupt, or a comfortable old age. Such "rights" require others to foot the bill, with the government intervening to make sure those unlucky others pay up. Governments become the dispensers of the unearned: They erect public universities and subsidize students, bailout businesses, and establish Medicare and Social Security. Thereafter, everyone woos legislatures to win favors while minimizing his bills.
To put an end to this sordid spectacle, we must discard the idea that anyone has a right to something at another’s expense. What would this dramatic change mean for higher education? Subsidies would end, and all universities would be private. Students would pay their own way or rely on private scholarships and loans.
In such a system, a university education would no more be within the reach of only the "rich" than are computers or cell phones today. In fact, with the Post Office-like mentality of all too many public universities replaced by the profit-seeking and value-oriented mentalities of corporations like Google (GOOG) and Apple (AAPL), we should expect in higher education what we’ve come to expect in the tech industry: rapid innovation and falling prices.
That is a future truly worth picketing for.
Investments in public higher education offer huge benefits to the U.S. economy as a whole. Yet over the past 30 years, state spending on colleges and universities has failed to keep pace with costs, creating constant pressure to raise tuition and fees.
Public spending on incarceration now exceeds that on public higher education in a number of states, including California, Massachusetts, and Oregon.
Sure, the public institutions that educate about 75% of college students in this country cost far less than the privates. They also spend a lot less per student, relying on part-time faculty to help keep prices low. Some economists like tuition hikes counterbalanced by increased financial aid, because they lead to higher prices for those who can afford to pay.
But consider the bite on families in the middle of the income distribution—the third quintile. In 2007 to 2008, average net college costs (tuition, room, and board, minus financial aid) at public four-year institutions represented 25% of median family income, compared with 18% in 1999-2000.
Many students have gone into hock. By 2007-2008, graduates of public four-year institutions who borrowed to pay for school left with an average burden of $19,839.
The Great Recession has amplified these problems. The California higher education system—once a model of affordability—recently hiked tuition and fees by 30%. Other states are following suit. The increased financial aid proposed by the Obama Administration—including more generous Pell grants—will surely help. But our financial aid system is both complicated and inadequate.
Indeed, increased financial aid for low-income families often serves to justify tuition hikes, leaving students and families who are right at the edge of eligibility in the lurch.
The loss of eligibility for Pell grants as parental income increases can reach the equivalent of a 47% marginal tax rate. If we hiked income taxes on the very rich to that level, imagine the protests we would hear.
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