Let’s make paying for college harder
I was disappointed with Obama’s retraction of the tax benefit for college savings, referred to as the “529 plan.”
And, although some would claim that the 529 tax shelter was used by more than rich or very well-off people, it’s still a very lopsided regressive tax, because the majority of Americans can barely scrape by on their income, never mind saving for their kids’ college funds. But that’s not exactly the point I’m trying to make, although it’s a very important point.
The larger point is this: whenever we make college more affordable by helping people pay for college, it just makes college more expensive. Tuition rises to meet our new-found ability to pay. And although I can’t prove causality for every tuition hike, the data kind of speaks for itself:
versus here’s the federal aid growth:
The result of our federal loan programs, which were started with good intentions, is that whereas before college was out of reach for lots of people, now it’s still out of reach, they go anyway, and then emerge loaded with debt. It’s not actually a huge improvement for the vast majority of the middle class, but it’s become a requirement to get a reasonable job so people are forced to go through it, kind of like a hazing ritual.
There’s another related reason why college tuition goes up, namely because we have stopped funding state schools, so their tuition is higher, and the other colleges also rise to meet them. But part of the reasoning behind that is because we have all these federal loans available, so why would we need to fund the state schools.
We need to put into place ways for tuition to go down. First, we make paying for college harder, and that includes for upper middle class folks. The reasoning is this: if you’re the only person having trouble paying for something, that’s bad. But if everyone has trouble paying for something, the price goes down.
Second, we make state schools much cheaper, or even free, by funding them.