Should Higher Education Be Free?

The first topic CONFLICT REVOLUTION will tackle is one relevant to every young person currently navigating their way through a competitive job market and economy: in a world where college is increasingly common (even necessary), what role should government play in subsidizing its high - and growing - cost? A remote coin toss has determined that Stephen gets to go first this week; Matt responds below.

Posted by Stephen, 12/8/11:

Should higher education be free? Well it would certainly be nice if it were. But that would require professors to stop demanding pay for their time (which would most likely make all but the most dedicated change their career path - as well as starving all those who foolishly do become professors); mandate that administrators do the same; ditto for all those who are the support staff at universities. Or we can ignore this ridiculous scenario and head to what our topic really means, since education does cost money, someone must pay. Thus our topic really becomes: Should the taxpayer subsidize higher education? Further, since subsidizing ALL higher education would be far too costly, let us focus on just subsidizing a segment of the population that I’m sure my leftist companion will define the"99%" or everyone minus "millionaires and billionaires” i.e.families making $250,000 or more.

One, it turns out that government subsidizes in education doesn’t do much to control cost, but I doubt there was any shocker there. In fact, government subsidies have done nothing more than to push prices up. As Virginia Postrel in Bloomberg Business Week writes:

It’s a phenomenon familiar to economists. If you offer people a subsidy to pursue some activity requiring an input that’s in more-or-less fixed supply, the price of that input goes up. Much of the value of the subsidy will go not to the intended recipients but to whoever owns the input.

Two, government intervention has spurred an industry of “for profit colleges” which charge high prices and provide low quality educations. These colleges target lower income demographics and look to pump them through the system with government debt. When they graduate, employment prospects are not much higher.

More on paying for college after the jump...

Three, for the majority of students, college is an investment that will not pay off for them. College education has become necessary not because of needed knowledge, but because of a glut of low skill college grads – which is a result of government intervention in the first place (so now the government must act to solve a problem created by its acting). I would be ok with the investment argument if we need our call center operators to have degrees, unfortunately these positions do not require much art history, sociology or whatever the hell they teach in “communications” – which is what the majority of these new college attendees will end up taking. Furthermore, it turns out that the myth that college graduates make more money is because the most talented have been skewing the numbers. Edwin S Rubenstein writes:

College graduates who do not have the functional literacy traditionally associated with college degrees are the ones taking jobs that had previously gone to employees with high-school diplomas only. The wages of these folks, after adjusting for inflation, have remained roughly unchanged over the years (about $15 per hour in 1994).

In conclusion, I don’t think the government should invest in your education anymore than I expect them to invest $3,000 in my E*Trade account.

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Posted by Matt, 12/9/11:

My answer is a resounding... it depends. No, higher education should not be entirely free in the sense that if you want something you should at least have to pay something for it. To the second question: no, the government should not invest in your education if you come from a wealthy background and your parents can pay for it, for the same reason that wealthier seniors should not be entitled to the same Medicare benefits as their counterparts of more modest means.

But should Uncle Sam help to put you through school if you want to go, can hack it in college, and you or your family don't have the money to pay for it on your own? Absolutely. My bigger question would be - why not?

The next question I would ask is - if the government doesn't at least help students get through school, how do you deal with the question of access when, in a modern society, not everyone who is qualified to attend college can pay to go? I'll use myself as an example. I just graduated with honors from Georgetown, but I wouldn't even have been able to accept its offer of admission without substantial financial help. Now, the bulk of that help (about $30,000 out of roughly $55,000 annually for tuition and fees) came in the form of a university scholarship. But with a family contribution that, at about $10,000 per year, still required my single mother (a professional musician, not exactly the most lucrative profession) to take out a home equity loan, where was the other $15k/year supposed to come from? I got about two-thirds of that in student loans, which means I'm now about to start paying back over $30,000 (not including costs from my freshman year, also spent at an expensive private college) in loan debt. That means that with minimum payments of about $300 per month, I'll be writing checks to my college creditors for the next 8 years. Approximately.

So the federal government only directly financed my education to the tune of about $5,000/year. But that was an important $5,000, and I couldn't have gone to a place like Georgetown without it. What should I have done if there wasn't a Pell Grant program, or Federal Work Study? Appealed to a wealthy philanthropist? Between my existing loan debt and the $10,000 annually that my mom scraped together to put me through school, I have a hard time believing my family should have been responsible for paying more.

Clearly I belonged in college, and I wanted to be there. I'm not sure how I would have made it happen without government support.

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Posted by Stephen, 12/10/11:

First, I would like to point out that Matt did not actually address any of my points in his response, failing to refute the idea that government subsidies are the reason for higher tuition prices; that college isn’t a good use of money for most; and widespread college attendance hasn’t done much to increase the wages of the lower skill jobs that now require college degrees. Finally, “why not” is simple: it costs the US taxpayer money while further driving up cost and has no true upsides. I continue to believe that the government ending college subsidies would do more to achieve its goals than current failed policies.

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Posted by Matt, 12/11/11:

Here's something you won't see me tell Steve very often: you're right. Government subsidies help to drive up the cost of tuition; common economic sense tells us that when more people want something, its price will increase. And with thirty years of flat wages for everyone not in our country's top income bracket, you're also right that college attendance hasn't helped to turn back the tide of rising income inequality in the US.

Still, you can't make any of the economic arguments while ignoring the question of access. The government isn't a business; it's job, among other things, is to insure that everyone has at least a fair shot at success. Would you disagree? Education subsidies may cost every conservative's favorite straw man, the taxpayer, money, but how else do you account for the fact that without government help, millions of qualified young people couldn't attend college? Is higher education going to simply be the privilege of the well-heeled? If so, we should probably stop pretending that we live in a meritocracy.

And let's break down this taxpayer argument further: under current policies, the maximum amount that the very poorest college students can receive in federal grants (i.e. money that doesn't need to be paid back) over the course of all four years is $38,200. At the same time, since college graduates make more money in a lifetime than high school grads, they will pay an average of over $200,000 more in taxes BACK to the federal government. Better than a 3 to 1 return? That strikes me as a pretty good investment.

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Posted by Stephen, 12/14/11:

In Matt's response, he makes three statements. First, that my argument that government subsidies have caused prices to rise is correct. Then, he agrees that, yes, despite increased levels of college education, lower skill jobs are not earning more (although later he will write that college grads make more than high school grads -- if you remember, in my opening statement I told you why: college grads from the lowest schools are displacing those with just high school degrees from the lower levels jobs; so now one must pay and take on debt in order to retain a call center job). So what I now ask you is what good has occurred if one is making the same wage, but must take out tremendous debt to do so? All this has done has created lower real wages.

Second, the middle argument Matt makes gives me a good lead in to invite our readers to return for a future debate, where we can discuss our visions of government -- because no, I absolutely disagree that the government should be ensuring access based on financial means. Ensuring that everyone has an equal chance, yes, giving them money to do it, no. Yes millions of young people wouldn't be allowed to get drunk at frat houses, terrible. But our call centers would have just as many qualified employees. Those who have the drive to rise to the top, will always find a way, and are willing to do whatever it takes to get there. Thus, I maintain that our government should end college subsidies since they cost too much and fail to truly enhance one's earnings.

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Posted by Matt, 12/14/11

If helping to distribute a modest amount of need-based financial aid isn't insuring that everyone has an equal chance, what is? This isn't about college parties. It's about the fact that a college education has become a distinct economic advantage - and at the very least, in a fair society, everyone needs to have a chance to give themselves that benefit. Those who have the drive to rise to the top will always find a way? Increasingly, "rising to the top" in our society requires a college degree, which costs money. If you're poor, where is that money supposed to come from?

To the economic side of things: for your part, you never addressed the fact that for every dollar the federal government doles out in college aid, it ultimately gets four in return. I'm not sure how you get around that if you're arguing that education subsidies are a waste of money. As far as wages are concerned, I would argue that wages have stagnated not because of increased college attendance but because for the last 30 years the spoils of our economy have gone overwhelmingly to the rich.

But the real story behind the story here is our economy's inability to create jobs that don't require a degree and the debt that comes with it. Everyone should have the opportunity to attend college, but no one should feel as though their very economic livelihood depends on it.

The fact that college has become increasingly necessary is a testament to the decline of the American labor and manufacturing sectors, which has benefited investors and corporate executives but certainly not the American worker, who has had to take out more and more debt in order to make ends meet. The college issue is a symptom of this broader problem.