In January, the University of Illinois announced it was raising its tuition on new undergraduates at its three campuses yet again. Lamentation was general throughout the land. Tuition for residents at Illinois public colleges and universities used to be somewhere below laundry among the various costs of going to college, but it’s been outpacing inflation since the 1980s. How can even a middle-class family afford to put a kid through college?
Better to ask, “How can an impecunious state government afford to put a middle-class kid through college?” For a century or so, Illinois, like most states, sought to make public colleges affordable for the poorest citizen by making public higher ed cheap for everyone by directly subsidizing basic costs. James Nowlan, now a senior fellow at the Institute of Government and Public Affairs at the UI in Urbana and author of Illinois Politics: A Citizens Guide, complained for years that this taxpayer subsidy is not going to the children of the poor who are trying to better themselves, because, increasingly, students from that social class either don’t go to college or they do and drop out. (By the latter 2000s, paying for public university cost typical poor and working class families more than a third of their income.) The student who benefits from the subsidy are mostly well-off kids who, for the most part, already have a lot of advantages.
It ought to be good news, then, that those subsidies have been cut. Today direct general tax support from the state covers less than 15 percent (although it accounts for 35 percent of the fund out of which teaching is paid); in 1980, state taxes covered nearly half of the University of Illinois’s operating expenses.
Unfortunately, these cuts have not been made to improve the economic efficiency of public spending. The old civic-good rationale for education spending is being replaced by a market-based rationale. Paying for college is an investment in private earning power, not civilization, and those who benefit most should pay the most. Thus the shift from general tax support to support for individual students (based on either merit or need), and from public support in all forms to private debt as ways to finance higher ed.
More than half of U of I students are insulated from the full impact of rising tuition and fees because of need-based and merit-based aid provided by the university and federal and state grant programs. Let us not forget federal aid in the form of tax deductions for families with kids in school and credits such as the 2009 American Opportunity Tax Credit. Oh yes, and tax-free scholarships, student loan interest deductions and education savings accounts (ESAs). Indeed, some reformers speculate whether we could make public higher education free if we simply spent all indirect aid directly and eliminated tuition altogether.
There is much to dislike in this jury-rigged “system” of funding higher ed. For one thing, students who must take on debt for even cheap public schools don’t always do this wisely; what most American kids want to study, according to several studies, is not what the job market rewards. Others go to college only to find out they hate it and drop out, and face loan repayments in spite of learning about nothing but their own foolishness.
Students present and past now owe more in loan debt – something like $1 trillion – than the nation as a whole owes on its credit cards. Happily, 90 percent of recent recipients of bachelor’s degrees graduate with less than $40,000 of debt. That’s still enough to be a problem if one is un- or under-employed, which a lot of recent grads are at the moment.
In January, students of the University of California’s Riverside campus came up with a plan to pay for school and abolish tuition, which currently runs about $50,000 over four years for a Golden Stater, not including mandatory fees, room, board or books. According to the “UC Student Investment Proposal,” students would commit to paying back 5 percent of their annual income each year for 20 years after graduating. The average kid making $50 grand would fork over $2,500 a year, which over 20 years would deliver the university about what it spent on him. A student who goes on to earn $100,000 a year, however, would give back $5,000 to the university each year, which is $100,000 over two decades – a nice profit for the school. That’s a boon for the university and a bargain for the kid who goes on to a modest career. The university’s Board of Regents, I am delighted to say, is looking at the idea seriously.
The last time that the rest of the U.S. looked to California for new ideas it got Ronald Reagan and right-on-red. One, at least, made life better in America. Maybe the kids from Riverside will pull off that trick again. Coming up with bright ideas is why we send kids to college, remember?
Contact James Krohe Jr. at KroJnr@gmail.com.