Wednesday, February 27, 2008

The Case Against Government Subsidies for College Tuition

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

The Case Against Government Subsidies for College Tuition (HT: Instapundit):

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.

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.

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

Nobel Prize-winning economist Gary Becker has some 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 excellent article by Becker and his colleague Kevin Murphy). This 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...

...III. How government tuition subsidies harm the truly poor.

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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