To lower college costs, eliminate tax-funded tuition subsidies

Last week Governor Ritter signed a bill that allows Colorado’s tax-funded universities to raise their tuition.  In response, “some Colorado students will see increased financial aid to offset the higher tuition, ” InDenverTimes reports.

Surely some parents are rightly concerned with fast-rising tuition costs.  But Capping college tuition would either degrade a school’s quality or reduce scholarships students receive. For lower tuition prices, eliminate tax-funded tuition subsidies and financial aid. Employers and prospective students would benefit.

Government-subsidized student loans and grants increase tuition prices. When government subsidizes the cost of education, students pay less, so more people want to buy what colleges sell. Colleges respond by increasing tuition and fees. This isn’t just theory.  Economist Gary Wolfram’s research documents empirical evidence that backs it up.

College subsidies hurt both students and employers. College isn’t for everyone, but tuition subsidies create the illusion that it is. As career counselor Marty Nemko summarizes, “College students with weak high school records usually drop out, having learned little, and with devastated self-esteem, a mountain of debt, and a job they could have obtained without college.” Employers hurt because these students could have spent their college years gaining valuable skills through, for example, an apprenticeship program or on-the-job training.

Absent harmful tax-funded college subsidies, private alternatives would replace them. These would include the familiar student loans and scholarships. An intriguing alternative would be “human capital contracts,” where in exchange for investors’ paying their college expenses, students repay them a percentage of their future earnings over a specified time.

Whatever the alternatives, it’s immoral for politicians to confiscate our earnings to distort the labor market and meddle in people’s lives. Young adults have the right to pursue their dreams and careers according to their own judgment, rather than the schemes of politicians.

A version of this article was published on-line in the Daily Camera on June 12, 2010.

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