Tuesday, March 17, 2015

Zero Tuition: Who pays? Who profits? (1 Feb. 2015)

            It's not a name you'd know, but he's important for the current debate on zero or low tuitions at community colleges, and for reducing tuition and fees at four-year colleges and universities.
            As described in a memoir by the Director of the Bureau of the Budget of the State of Illinois in the Ogilvie administration in the late 1960s, "there was a fellow by the name of David Eisenman who had been at the university [of Illinois]. David worked the tuition issue very hard […,] and our thesis on tuition was that low tuitions are a massive subsidy to middle class and upper middle class families. If you really wanted to assure equal access to educational opportunity, what you should be doing is charging high tuitions and then [use] the Scholarship Commission as a vehicle for providing assistance above tuition and fees to low income families to get their kids in the university system." 
            What State legislatures did, of course — mostly for reasons other than class equity and fiscal fairness — was reduce subsidies to public higher education, eventually drastically, with only small increases in scholarships and grants.
            And so the cost of public higher education was shifted significantly to students and their families, even while the those costs increased and then continued to increase.
            In part, that's fair, especially with four-year institutions: most Americans pay taxes, frequently "regressive taxes" like the sales tax, or often-oppressive ones like property tax; only some people go on to higher education, and the ones who go to the big, prestigious public research universities tend to be well-to-do, and even community college students aren't often the wretched of the Earth.
            In larger part, the high-tuition/high-fees system is unfair and unwise: it's depriving young people chances their elders had for inexpensive higher education — those who received The G.I. Bill, "War babies" and Boomers like me who paid only token tuition — because it's depriving the American Republic of a large body of well-educated citizens, and because it's depriving the American economy of educated people who can help America survive and thrive in what will be increasingly sharp global economic competition.
            The non-solution so far has been mostly student loans, which has been great for bankers but not even good for most others. The banks get nice capitalist profit on the loans, while the risks get socialized: your tax dollars in action guaranteeing (for the banks) at least part of the loans.
            It didn't and doesn't have to be that way.
            Here is another name you probably don't know but should: the Honorable John J. Gilligan, Governor of the State of Ohio 1971-75 and sufficiently an advocate of an alternative that it was sometimes called "the Gilligan Plan." It was more commonly known as "Pay As You Earn," or PAYE, and the idea has been around — and implemented on a very small scale — for nearly half a century.
            The version of PAYE I have pushed is one in which the Federal government advances to any qualified resident enough money to actually afford a college or university education: which can be a substantial sum for married people with families, "nontraditional students" such as we had with veterans under the G.I. bill.
            This sounds expensive, and the original outlay would be very large; PAYE would, however, save money and could turn a modest profit.
            PAYE advances are loans that must be repaid, and repayment can be through a surtax on one's Federal income taxes at a rate set by actuaries so that the basic program breaks even, with former students paying back their loans if they can afford to and as they can afford to, and with a time limit on how long they must pay.
            If you graduate and go on to make a lot of money, you pay back the loan with interest; if you don't make a lot of money — or hardly any at all — then you pay back what you can.
            But you do pay back: A well-funded IRS has shown itself to be very, very effective at getting the sovereign capital "P" People money we're owed. And it makes far more business sense to collect money from people who have been out working for a while and have money than to start dunning immediately recent graduates who are broke.
            The rates can be set so that students can pay full freight for the cost of their educations, but between market forces and government arm-twisting, students should have to pay no more than that. Capital expenses, research, public service (including providing cheap semi-pro sport), top-heavy administrations, and other frills — those can be subsidized by the States and, with luck, in some areas subsidized a good deal less.
            As a former college teacher, the major advantage I see to the plan is that it would attract more full-fledged adults to college campuses and help concentrate the minds of younger students. For sure, it will limit the weirdness of the American State's offering more or less adequate, more or less free education to people's children when those children are children, and then asking parents of legal adults to pay for further educating for their adult offspring, helping to reduce our current over-load of "adult children."
            (My slogan as a teacher: College Is for Grownups, not what a couple of my students called, in two very fine essays, "College: Half-Way House to Adulthood," and "College: The Four-Year Vacation.)
            As a very-long-term US resident, I like the idea of reducing subsidies to the well-to-do while helping "to assure equal access to educational opportunity."
            As a taxpayer, I also like the possibility of driving down college costs if colleges have to compete for students who themselves have to pay for their educations, and at the same time having all taxpayers who are paying attention highly conscious that we are putting up money, at least for a while, to support those colleges and universities.
            Many banks will lose a sweet source of income, but right about now a lot of Americans might well say, "Screw the banks"; the money the banks are not lending to students they might put toward carefully-vetted local mortgages and loans to small businesses: that social-responsibilty stuff they may recall from old movies like It's a Wonderful Life.
            So my vote is for "No" to zero tuition, but an emphatic "Yes" to investing in education, but investing with high probability of high return on the investment, starting, crassly, with getting back the money.


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