The Case Against Government Subsidies for College Tuition

Parent Cafe
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<p>Ilya</a> Somin, Assistant Professor of Law at George Mason University, makes a cogent argument that government subsidies upset the economic apple cart for higher education.</p>

<p>The</a> Case Against Government Subsidies for College Tuition:</p>

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The supposedly unbearable cost of college tuition is a hot issue in this year's presidential election. Both Barack Obama and Hillary Clinton include it in their stump speeches, as did some of the Republican candidates. Politicians are outbidding each other in proposing to increase various government subsidies for tuition payment. If government doesn't act, they claim, the middle class and the poor won't be able to afford to send their kids to college. </p>

<p>In reality, college is getting more affordable, not less, once you take into account the rapidly increasing income gains from getting a college degree. Far from being an essential way of helping the poor, government subsidies for college tuition are likely to harm them for the benefit of the relatively affluent.</p>

<p>I. The increasing benefits of college education are more than enough to pay the increasing costs. </p>

<p>Nobel Prize-winning economist Gary Becker has some</a> important correctives to the conventional wisdom on the cost of college. It is indeed true that tuition rates have risen greatly over the last 30 years. But, as Becker notes, "the benefits from a college education in the form of higher earnings, better health, better educated children, and many other aspects of life have grown much faster than tuition has" (see also this</a> excellent article by Becker and his colleague Kevin Murphy). This</a> 2002 Census Bureau study shows that a worker with a bachelor's degree can expect to realize almost $1 million more in lifetime earnings than one with just a high school diploma...</p>

<p>...III. How government tuition subsidies harm the truly poor. </p>

<p>Not only are government subsidies for government tuition unnecessary, they also victimize the truly disadvantaged people in our society: those who lack the educational qualifications to go to college in the first place (usually due to a combination of poor public schooling and a flawed family environment). These people pay some of the taxes that support subsidized tuition for college students who are likely to end up far wealthier than they are. They are also indirectly harmed by the diversion of public funds to tuition subsidies and away from other priorities that might do more to advance the interests of the truly poor. Government tuition subsidies are a classic example of a policy that redistributes wealth to the relatively affluent under the guise of helping the poor...

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<p>Heheheheheheehehe. That dude’s FUNNY. …Oh…wait…he’s serious…uhhh… nevermind.</p>

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<p>And we can see from this post how the OP feels about redistribution of wealth as a goal worthy of our efforts:</p>

<p>

Give me a beachfront cabana, please. Edit after reading more OP posts: And can you bring me a Darwinian margarita? ;)</p>

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<p>Just goes to show you don’t need to have a lick of common sense to be a lawyer.</p>

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<p>Does he really think that the low-income parents of today can pay the tuition using their children’s potential future earnings?</p>

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<p>What HAS the OP been smoking [ and why hasn’t he offered to share it? [joke]]</p>

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<p>I don’t think they are talking about parents paying based on children’s potential earnings. I think they are saying that compared to years ago, taking on student loans to go to school can be paid back much quicker and easier because the earning of a college graduate are a higher percentage of loans taken out compared to years ago. I.e. (Making up numbers here: Loans for 4 years of college was equal to 3 years of income 20 years ago. Today, loans for 4 years of college is equal to 1.5 years of income). Again, making up numbers.</p>

<p>Also, IMHO; college costs are relative. Many states are quite inexpensive for in state residents. I know of quite a few states where the full costs for an in state resident is approximately $12,000-$15,000 a year. That includes dorm, food, tuition, books, etc… At most, that is $60,000 which is manageable with loans. What more, most states have some very good scholarship programs. New Mexico for instance uses their lottery income to subsidies scholarships. Many other states have scholarships for ALL students that have certain grade point averages. It’s stepped. So, a $15,000 cost for the average student, could actually be as low as $6000 for attending. This doesn’t account for any and all other scholarships and such. $6000 a year is $24,000 after 4 years. That’s the cost people pay for a car. That is very reasonable to take a loan out for and pay back after graduation and getting job.</p>

<p>Getting into college and affording it; IMHO; is easier and cheaper than it was 20-30 years ago. Now, if a kid is hell bent on going to yale, Harvard, Princeton, etc… and can’t afford it, then I’m sorry. No one owes you a college education. Not even your parents. It’s all about supply and demand. If no one applies to harvard because they can’t afford it, then Harvard will reduce their prices. As long as they have people willing to pay it, they will charge it. But that isn’t what matters. When it comes to “STATE” universities/colleges, they aren’t that expensive. Even if you didn’t get any scholarships and had to take a loan out for all 4 years, it’s not that expensive compared to what you will gain financially for attending. I believe that the problem is the “Entitlement” mentality. Too many people think that the government owes them a college education and that somehow they shouldn’t be expected to pay $60,000 for a college education. Then again, that is part of the “Redistribution of Wealth” mentality. There are a lot of people who support the social/welfare type of economy where the government supports them. </p>

<p>It took me 10 years to get an associate’s degree; another 5 years for my bachelor’s; and another 2 years for my 3rd degree. It has helped me advance, and I didn’t use any tax dollars to do it. Many companies you work for even pay for a large portion of continued education. Nothing says you have to go to college immediately after high school. Even Mini-Mart has a program where they will pay for their employees to go to college. Sorry, we don’t need more government subsidies.</p>

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<p>Okay, let me get this straight. Bright student who cannot afford college will earn $1million less over the course of his adult life, be less healthy(costing society money), have less education children which will themselves earn $1million bucks less over the course of their working careers.</p>

<p>Now we give that same student a subsidy of what, $8000/yr(?) to attend local community colleges and public universities, to earn their degree. At a marginal fed tax rate of 25% that will generate $250,000 in tax revenue for him and and additional $500,000 for his two children who he can now afford to send to public colleges. Add to that another $100,000 in extra health costs for him and his family and we get a pretty good ROI on that $32,000 college subsidy.</p>

<p>But who needs teachers, engineers, computer programmers, nurses, doctors, social workers, artists, trained musicians, etc. We will just build a few more Wal-Marts to ship in cheap goods from China, while they educate an army of engineers, computer programmers, and savvy businessmen who will be more than glad to welcome more manufacturing and lucretive tech jobs.</p>

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<p>OL; you bring up some good point, however I don’t necessarily agree with certain assumptions. I don’t believe that a non-college educated person is less healthy than a college educated individual. Thus costing society more taxes. I know many people who didn’t go to college. Matter of fact, only about 65% of high school graduates will even attend college. Graduating is even lower. Also, my single mom was a high school drop out, but that didn’t mean that I would become one. Or never desire to go to college if I wanted. Plus, the whole $1 million over a lifetime earned is relative. My brother lives in New Jersey. He is not a college graduate. He makes about $30,000 more a year than I do, yet I have 3 college degrees. Also, even though I make less, my income does go further than his because of my cost of living. $1 million over 50 years of earning, means approximately $20,000 more a year. There are a lot of successful people in the country without a college degree. The numbers are very misleading.</p>

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<p>Neither I or my husband have college degrees- we make in a year- about what a public school teacher makes during the school year.</p>

<p>However- the govt assumes that we can pay full costs of an instate university or about $16,000 of the costs of another school.</p>

<p>My older daughter took out small subsidized loans to help with school, as well as working summer- work study & our own loans that we incurred because we couldn’t pay from income what the govt thought we could.</p>

<p>We recognized that a large instate public school was the most economical option for the short term- however- because we looked at the long term- to how much support from the school she would need to * finish* college, we decided that a small school would provide more towards that goal.</p>

<p>By having only small loans-( and getting a big grant from her school every day) she has been able to take a job that doesn’t pay big dollars but is giving her experience and is satisfying.</p>

<p>She also has been able to live on her own since graduating college- unlike her cousins who are having to live at home. However, her job doesn’t pay well & she is without health insurance, although she is on the wait list for low income insurance.</p>

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<p>A few thoughts about the blog posted and the studies it cites:</p>

<ol>
<li><p>George Mason U Law School = very predictable</p></li>
<li><p>As originaloog suggests, why isn’t governmental subsidy justified on a pure investment analysis? If college education really creates higher earnings, as well as better health and higher earnings expectations for the next generation, why isn’t there some subsidy level where government would expect to earn its “investment” back through higher tax collections in the future? That’s not income redistribution, that’s productive investment.</p></li>
<li><p>Looking at the underlying Census study, I wonder just how good the case is that higher education creates wealth. Just as with some of the studies comparing different “quality” levels of colleges, this study makes no attempt to correct for innate skill differences among groups with various educational attainments. If one hypothesizes that there may be significant differences in intelligence, focus, drive between people who graduate from high school and attend no college, and people who get BA degrees, then one wonders how much of the $1 million average estimated worklife earning difference is attributable to that, and not to the skills learned while getting a BA.</p></li>
</ol>

<p>The study also fails to account for reduced earnings prior to age 25 among people who go to college rather than work full time. Thus, it overstates, significantly if time-value is taken into account, the difference between going to college and not going to college.</p>

<ol>
<li><p>Getting an AA degree seems to produce about two-thirds of the expected income difference between merely graduating from high school and getting a BA. Given the cost difference between the two, it’s an interesting question whether the investment in a BA is rational (unless it’s a way station to a higher degree). It looks like it is – but maybe not if you adjust for intelligence and lost early-career earnings.</p></li>
<li><p>Correct me if I’m wrong, but aren’t most community colleges heavily subsidized? Why isn’t the author complaining about that – it presents exactly the same redistribution issues as tuition subsidies. For that matter, I would love to see data on the lifetime earnings of those who serve in the military vs. those who don’t, given equivalent educational achievements. Should we stop “subsidizing” military training – something where the subsidy level is about 100% – because the people who get it may wind up richer that others?</p></li>
</ol>

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<p>The counselor presents a very weak case. I say it never goes to trial.</p>

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<p>Where do we get these subsidies? I have not found any yet.</p>

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<p>^ That’s a little disingenuous. There are many subsidies in place.</p>

<p>-Direct public funding of community colleges and public colleges and universities
-Scads of favorable tax rules, including contribution deductibility, income property and sales tax exemptions, deductions for dependents who are legal adults but enrolled in college, benefit rules that encourage health coverage of college students, nontaxability of tuition scholarships
-Pell grants, Sallie Mae, GI Bill
-Generous overhead contributions from government research contracts</p>