Wednesday, October 23, 2002

This morning's Wall Street Journal carries a small editorial (link requires subscription, sorry) on rising tuition costs. Here at SCSU tuition went up 11%, while nationwide it went up 9.6%. You'd think that would drive down enrollments. But financial aid nationwide is up 11%; here at SCSU we had to stop enrolling new students in July, which according to Provost Spitzer is the first time in anyone's memory that we've done that.

Isn't this economics stood on its head? Normally, when costs rise this much customers, er, um, students and parents (we do hate the c-word around this campus) start screaming and stop paying. But as the editorial notes, not so for education.
Parents will pay a lot to stamp their children with a brand name for life, and in any case the politicians have created a system of subsidies that increase along with tuition. These are federal as well as state, direct as well as indirect through the tax code, and they effectively immunize college campuses from the market pressures that businesses face every day. Thus have we created a vicious circle: Tuition goes up, the politicians deliver more aid, and tuition goes up some more.

In other words, taxpayers are chasing their own wallets. Given the powerful economic benefits that accrue from a college degree (Census figures put the difference in lifetime earnings between college grads and non-grads at nearly $1 million), government subsidies amount to a reverse wealth transfer in which Peter, the working stiff, is taxed to underwrite college-bound Paul and the tenured faculties living in Madison and Chapel Hill and other leafy latte towns. Maybe it's time to stop.

I'd write more, but I'm off for a latte myself, after which I'll be picking leaves off the snow.