The great thing about taxing endowments (presumably you only want to tax the big ones) is that you’re rewarding the lousy fund managers and punishing the talented ones.
That’s not a great benefit from a societal perspective. Tax ALL endowments- Catholic church, Yale, the struggling HBCU trying to stay open, Metropolitan Museum AND your local historical society. But to selectively apply a tax only to the successful and talented is to deliver the message that being a responsible steward of your resources is a bad thing (I don’t think you agree with that) AND that being a lousy investment manager gives you a license to continue to be lousy.
I would like to see them all taxed - churches, foundations, endowments, etc. Pay your fair share just like the rest of us. As a result, I will have more disposable income with the extra receipts to the treasury and I prefer that the government is not favoring any organizations.
As for your reward and punishment … your argument is off kilter. All successful individuals and corporations are taxed more than less successful ones. I do prefer a flat tax rate as opposed to progressive taxation. But, the winners will always pay more.
Far fewer college students attend private schools than attend public schools, and public schools are (were) subsidized to allow the population to upgrade its skills (even if some or many could not otherwise afford the unsubsidized cost up front), leading to greater economic output (and hence tax revenue) in the future.
But many states’ defunding of public schools means that they are less effective at this goal than they used to be. Decades ago, the very low tuition and available financial aid at many in-state public schools allowed students to work their way through college living on their own without any parental support (living at the parents’ home at no charge is parental support). In many states, this is now a much less doable option (living at the parents’ home at no charge is often necessary now, but that can limit academic options of the nearby public schools do not have the intended major, or are too selective for the student).
As it is now, there is great variation in how much choice and opportunity a college-intending student has. A high performing student from a wealthy family will have the maximum range of college choices. But a high performing student from a poor family will have a much more limited range of college choices (though that will depend on state of residency), often a smaller range than an OK student from a wealthy family. An OK student from a poor family may have very few to no options (depending on state of residency).
The question then becomes, is this the desired state of affairs? If not, how should it be changed?
You think that the reason college costs have risen is that states have defunded their schools??
Right or wrong, this is simple economics. Government is actually the primary reason costs have risen faster than the rate of inflation. Governments have created excess demand which has helped increase the price. Not too mention the cost of administration to meet all the regulations demanded by the feds.
And, in reality, the students being squeezed are the middle class who do not have the means to pay large amounts of tuition and do not have incomes low enough to qualify for free tuition benefits.
Solutions … couldn’t answer in this limited forum.
Exactly. Thus, my response to the first question (private college) is, “Who cares?”
The second question wrt public schools is not so easy to answer. At first blush for example. UC tuition is high. But then, UC tuition can be zero for those in the middle-middle class ( up to $80k). So, not so high at all.
Some publics offer automatic merit money for good grades/test scores…so, the sticker don’t matter for them.
A lot of it has to do with priorities. You want college, you will find a way to afford it. But a lot of students want college AND booze, drugs, cigarettes, tattoos, piercings, designer accessories, spring break trips, and a car. Amazingly, I managed to go through college without drugs, cigarettes, tattoos, piercings, designer accessories, spring break trips, and a car.
The fundamental problem with college is not the price being charged. The actual net price/net revenue per student that colleges get has been going sideways for years. It really isn’t a ridiculous amount to charge for the product being sold. The real problem is that we are selling the wrong product (overly expensive model of a 4 year residential university education) to too many customers.
As UCB correctly points out, back in the glory days public college was dirt cheap due to ample subsidies. That model worked largely because so few people actually attended such colleges. U.S. college enrollment (public and private) in 1965 – 5.9 million kids with only about 40% of HS grads enrolling. 2018 – 21 million kids and 70% enrolling. Pretty much all college price problems would be solved if we simply most of the kids out of college!
The basic middle class product needs to be significantly changed and made cheaper if everyone is going to do it. So more like the European model. The new assumption is that no one (or hardly anyone) goes away to college for 4 years. The new assumption is that everyone gets 13-14th grade for free. Call that expanded high school or community college; could be academic or technical/career oriented. Then only some kids continue to traditional university for two years.
Perhaps that may be the idealized residential college experience, but most college students commute from where they lived before to colleges where most students do the same. I.e. they do not move to the college to attend, and do not live in student-specific housing (dorms, off-campus dorms, fraternities/sororities, co-ops). The idealized residential college experience is mostly for the relatively small number of students attending state flagship level public schools, some usually more selective private schools, and some public and private specialty schools.
Commuting from where one lived before (parents’ home for traditional students) to the local public university (possibly with two years of community college to start) is a relatively low cost option (living at the parents’ home is not cost-free, but parents often treat it as such, and the food/utilities/commuting costs are usually much lower than the costs of the student living on or off campus at the college), but can be limiting if the nearby one does not offer the intended academics, or is too selective for the student to get into. Some students in rural areas may not even have college options within reasonable commuting distance.
California has this model for about a third of those who will eventually attain bachelor’s degrees at the state universities, with very low cost community colleges and good transfer arrangements to the state universities (of course, the community colleges also serve many other students not intending to transfer to a state university to complete a bachelor’s degree). It works reasonably well for students in common majors who are not starting college advanced enough to want to take upper level courses in the early years, though perhaps less well for those whose majors require unusual lower level courses or who are advanced enough to want to take upper level courses early.
It looks like many other states have similar arrangements, though some have higher community college tuition, or fewer students transferring to state universities, or community colleges with fewer transfer-prep course options. There also seems to be a strong disdain for starting at community college among many students and parents.
Because the university is a nonprofit educational institution
Because, despite answer 1, they run like a business and only give away tuition to those who are unable to pay full price. They want the endowment to last in perpetuity.
Nothing, both get the same education and need is not considered during admissions. In fact, statistically, the wealthy are more likely to be found worthy of admission than the poor.
Because the government is not likely to use the money for higher education. (And actually they are taxing the investment returns in the new tax bill.)
We have no agreement that everyone is worthy of food and shelter in the USA (see the homeless, need for food banks, etc). We started to make progress on healthcare for all, but the party that voted for that was booted out the following midterm, and it’s now being rolled back. Do you really think the government would take on college for all who are worthy?
Dean Wormer: It’s not so much whether private elites have an “obligation” to poor students.
It’s more that they are looking out for their long-term interests, and they have decided that having a mix (but still weighted more heavily towards the upper (and extremely upper) end of the SES spectrum) yields them the best combination of top students, high-achieving alums, happy students, and thus alums who give back that they can find while still making their finances work.
It turns out, BTW, that really top students (both in academics, potential, and SES) are less interested in schools that shut out the truly poor.
As for solutions, well, as an individual, you have several:
A big cost of college is the living away experience. Commuting to college or even to CC before transferring would save a ton.
University of London distance degrees are very bare bones (they essentially tell you what you should read and then you take tests) but thus very cheap, and evidently the tests are as rigorous as those at the constituent colleges that lead a degree (so if you do well in a degree led by the LSE, you could say that you are just as good and the LSE gives scholarships to their master’s programs to top UoL students who study degrees led by the LSE).
German unis are tuition-free and they have some degrees taught in English. In general, degrees in Europe/Japan are either cheaper or much cheaper than full-pay at a private in the US and many are taught in English.
Merit scholarships if you don’t qualify for fin aid.
In-state discount.
Adult education degrees (Harvard Extension School, Penn LPS, Northwestern SPS) typically cost a fraction of what their flagship undergrad program costs in list price.
Holy cow, your reply is so full of misconceptions and odd interpretations that it is hard to reply.
I will tackle number 4 just to illustrate your lack of clarity. In the current tax bill, schools that have a balance of over $500,000 per student in their endowment will be asked to pay a tax of 1.4% on their endowment earnings. So, somewhere between 20-30 schools are going to pay a tax of less than 2% annually. Not much of a hardship as they sit on their billion dollar endowments.
As for your last commentary, we live in a Republic. As such, we ask that the federal government stay out of our lives as much as possible, not run them in exchange for free stuff.
Haven’t read the whole thread but completely agree with @blossom . Everyone makes their own financial decisions based on their own values (literal definition - what’s something worth). Would I make their crazy decisions? No. Would they make mine? No. Some will say, “This isn’t about a car or vacation, this is real money, perhaps hundreds of thousands of dollars”. OK. No different than buying a big house that some will feel is unnecessary. Point is, no one else is walking in your shoes. Your decisions are based on your circumstances and values. If that means full pay at expensive school, great! If that means state flagship, great! Not sure why anyone cares about anyone else’s decision. Maybe they’re trying to convince themselves they did the right thing, whatever that is.
My opinion is that the cost of a college education is way to high. I am aware that everyone has a choice as to what path to proceed on given their economic preferences/ability to pay.
I do think that our best and brightest should be at our very best schools and be able to do so without concern for finances. If we want the best for our country we want the most unrestricted path for our most talented students.
As someone who is politically moderate there are two areas that I think are critically important to our society. These areas being exceptional educational opportunities available to everyone without the student or students family incurring debt and exceptional health care being available to everyone at little to no expense.
Our current models are not working optimally, really they are not even close.
Well, that does not mean that the pricing system is immune from becoming irrational.
My belief is that the pricing model is ridiculous. The WSJ covered the story last year. Currently, private schools are forced to be offering the largest discount rates ever. Anecdotally, schools are offering kids scholarships after the May 1 decision date. This will not end well. Private schools will go out of business. article link below:
The two positions you have staked out are not politically moderate. In fact, the idea that the state will be responsible for providing education and healthcare are classic tenets of collectivism (socialism or marxism).
Oh, and any entity that has the power to bestow these benefits, has the power to take them away or ration them. When you give the state this power, you sacrifice your own liberty.
You need to go back and critically read your own history and poli-sci books. Or, just admit that you are not a moderate but a collectivist.
There are a lot of complaints about the costs of college and healthcare. I think its important to look at the role of subsidies in driving costs higher for both.
If the government was not mandating silly amounts of regulation that the colleges had to comply with … they would not be saddled with monstrous administrative costs.
If the government was not giving money in so many forms to students and schools directly … the demand would not be so artificially inflated. Excess demand equals increased costs.
At this juncture of history, who trusts the government to run education or healthcare???
@DeanWormer , My comment wasn’t regarding the irrationality of the cost of college. It was regarding the irrationality of other’s opinions on what anyone deems to be the right course of action for their kid.
Regarding cost of college, it’s seems ridiculous but it is its own market.
