The idea of offering free tuition to all students, regardless of major or GPA is an invitation for moral hazard. A more reasonable approach is to only offer free tuition to the following:
Needed majors – for example, elementary and secondary education. The payback being the graduate will benefit society.
High-income majors – for example, engineering. The payback being the higher taxes paid by the graduate’s higher lifetime earnings will offset the tuition.
Students who agree to take a government service commitment – for example, students who agree to work for a civilian government organization, such as a nurse agreeing to work for four years for a state public health service. The payback being the service gained.
GPA should matter. Most scholarships require the student maintain a certain GPA. The same should apply to a federally funded tuition program.
Caps. The value should be capped at the in-state tuition of the state the student graduated high school in. In most cases today that is about $45,000 ($11,250 per year).
A beneficiary surtax. Why not require everyone who benefits from this program to pay an additional few percent of income tax, say 2.5%, for 10 years – no exceptions. This is skin in the game.
For community colleges, there would be a similar program based on two years at the average community college tuition, selected fields of study, and a 5-year surtax.
What does this mean? It means the in-state engineering student with a 3.5 GPA at State Tech gets 100% of their tuition paid, while the Intersectional Grievance Studies major at Private U has to self-fund.
The same concept could be applied to loan forgiveness, with one important additional requirement: Is the graduate current on their loan payments?
The engineer with $75,000 of outstanding student debt, who graduated with a GPA above the cutoff would be eligible for $45,000 of loan forgiveness, despite the fact he or she earns $75,000 per year. The teacher could take a qualifying job at a qualifying school and get $45,000 of loan forgiveness. The Intersectional Grievance Studies major at Private U with a middling GPA who has $200,000 in debt and earns $20,000 as a barista will need to get a second job.
The point is, we (the taxpayers) deserve to get something back for our money. And we (society) deserve a societal benefit. A good teacher at an inner-city school, a good nurse at a public health clinic, and yes a software developer making $100,000 and paying substantially more in taxes than the average person his or her age are all benefiting society.
The government, between the Department of Education and the Department of Labor has a ton of data. This actually is not hard.
But there is still a problem, and it is the elephant in the room. The exploding costs of college education. Because of this, any participation by any university must be tied to dramatic cost controls. Again, the government has a ton of data. Government economists can extrapolate what a college education should cost in 2019 based on historic data. The actual cost is well above that. I am not speaking of an incremental decrease in the rate of increase of tuition, but a freeze at an immediate minimum, followed by bending the cost curve down to produce year over year inflation adjusted tuition, fee, and book reductions. Imagine the impact if suddenly 50% of the student bodies of every university were eligible for massive amounts of financial aid, dependent on the university going on a the financial equivalent of Keto. Imagine the prospect of a university losing a significant percentage of its incoming class to the cross-state college who is better managed.
And this is the part that makes the cost of such a program worthwhile. If the universities do not do their part, the cost of the program is limited. Imagine the impact if the loan forgiveness were not immediate, but was phased, and loan forgiveness was tied to the university making progress on cost reductions. Can you imagine the impact to alumni donations and alumni pressure?
Yes, this would be a costly program. But the idea of tying it to outcomes, such as societal needs and a direct incentive to universities to reduce costs makes it far more worthwhile than simply raining hundred dollar bills onto each and every incoming GenZ college student and every Millennial college graduate with outstanding loans.
Another key idea behind this is the government could start with a more limited program, and scale it up or scale it down as funding permits. By varying the qualified majors, and the qualifying GPAs, qualifying jobs, etc., the program could be controlled. Of course it could also be abused, but the key would be a system which can be scaled up or down. The scaling could even be hard coded into the law based on the appropriated funds. More funds appropriated, scale it up. Fewer funds appropriated, automatic scale down in accordance with the law, not the whims of Congress.
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