Friday, April 27, 2012

Who Should Pay for Higher Education?

It seems so easy to say that states should provide more support for public universities, but should they?  Who pays if the states pay more?  The answer is: the average taxpayer.  Why shouldn't the student attending the university foot their own bill.  Why should a taxpayer who is not attending and who may or may not have children attending pay to subsidize college students?

"We all benefit" is the usual refrain.  But, is that correct?  Does the average taxpayer benefit when Joe Dough gets a sociology degree from Alabama Polytechnic Institute, while sudsing his way through four years of school?  Certainly, the local bars in every college town would like to see higher subsidies by taxpayers for higher education.  They know where the poor college student likes to spend his/her own money.  Visit any major university and check out the attendance records in a typical class these days and you might wonder why taxpayers are subsidizing a lot of empty seats.

The usual principle is that if you want something bad enough you should pay for it yourself.  Why doesn't that rule apply to higher education?  I can understand the case for public funding for elementary school and secondary schools but the case for public funding for higher education seems to me to be no stronger than the case for public funding for iphones, ipads and tv sets. 

Study after study has demonstrated that college degrees are worth it to the student enrolled.  I point you to the most recent edition of the Journal of Economic Perspectives (Winter, 2012) for some observations on the "private value" of higher education in an article by academics Christopher Avery and Sarah Turner: "On the other side, the earnings premium for a college degree relative to a high school degree nearly doubled in the last three decades."  Earnings premium means how much more in earnings a student will earn with a college degree as opposed to a high school degree.  So, why should the taxpayer subsidize and make the premium even larger by transferring wealth from those without to those with?

In an otherwise excellent survey, the article by Avery and Turner does not raise the question: why does higher education cost so much more than it used to cost?  Are we doing something different in higher education that escalates the costs without limit?  That is really the much more interesting question than posing the endless pursuit of "how to feed the beast" exercises that involve more loans and more taxpayer funding.

So often you hear the refrain that state funding has been reduced or that big donor contributors are down this year.  Fine.  But, that does not explain why costs are exploding.  The fact that revenues are not growing as fast as one might like is irrelevant to the issue of why costs are exploding.  Higher education is not simply looking for more funding because existing sources are drying up, which is what college bureaucrats would have you believe.  Costs of higher education have been and are exploding.  Why?  Doesn't anyone care?

Tuitions this year rose once more at most major universities.  You have to wonder what expenses are rising so much in the midst of a still faltering global economy and a moribund US economy.  What is straining the budget?  Simply expanding student loans to an already overburdened student loan market adding to the mountain of debt that overhangs our citizenry and forcing taxpayers to cough up more and more  does not address the question of cost.  This is one more example, paralleling the health care debacle, that once you decide someone else should foot the bill, the bill explodes to infinity.