Monday, January 31, 2011

Raising tuition

I have quite a bit to say about this post from Richard Posner but no time to say it at the moment. I'll try to get back to this but in the meantime feel free to start without me.
In any event, there is no case at all from an overall social standpoint for subsidizing students who would pay full college tuition, without the inducement of a subsidy; the subsidy does not induce students to obtain a college education who otherwise would not because they could not afford to; it is a windfall to their families. Private colleges recognize this. They charge very high tuition (though not high enough to cover all their costs—but they have other sources of funds, such as alumni donations), but grant scholarships or loans to students whose families can’t afford the tuition. Charging low tuition to everyone, as public colleges do for residents of the state in which the college or university is located), does not make economic sense; it merely as I said provides windfalls to families willing and able to pay the full tuition. As Becker points out, this results in regressive redistribution of income, because families that can pay full tuition are wealthier than the average taxpayer, who pays for the costs of public colleges that tuition doesn’t cover.


  1. It's a strong discouragement on saving, to start off with. Why should I save for my student's college experience if I know that my incremental dollar saved will not change whether he can get that experience or not? If you could look back at parents' earnings for 20 years and ask whether they had earned enough (not saved and now make enough) to pay for tuition, you might be able to induce more savings.

    Along those lines, there's a similar challenge with my earning potential over time. If my child can attend college no matter what, I should earn and spend over the first 15 years of his life and then quit or retire to lower my income. Private school tuition sounds like a good investment in this context. Or better yet, how about an annual payment to each grandparent with the implicit agreement that they will later pay tuition.

    Many complex options, all because Posner thinks exclusively about income as how tuition is paid each year. Most parents, even rich ones, do not have $50k in disposable income each year, and if they did, they can pay it. We're talking about parents who could save either some or all of tuition money over 20 years, but are strongly discouraged from doing so.

  2. I did not realize that Richard Posner was so opposed to regressive redistribution of income. I suspect the real issue is that colleges are generally left-wing institutions and Posner is right-wing. I suspect he would also oppose government support for labor unions, Hollywood, and other left-leaning institutions but would not support funding for the military, the oil industry, other right-leaning institutions. Or, to put it another way, I suspect these are his inclinations and that it will not be hard for him to find arguments--counterintuitive or otherwise--to support these positions.