Monday, July 21, 2003

Progressive tuition plans 

I suppose we at SCSU should be glad our tuition is only going up 15% this year. The budget disaster in California has caused both the UC and CSU systems to take their tuitions up 25% (with a pre-approved 5% more if the budget situation causes a further cut in the higher education budget.) What is novel in the UC plan is a proposal (not yet enacted) to put a surcharge on students from higher-income families.
To address that issue, in September the regents will also discuss the idea of increasing student fee revenue with a surcharge on affluent families to offset the $9,000 state subsidy the university uses to cover approximately $15,000 in instruction costs for each student. The surcharge, which could be applied to families with incomes of $90,000 or more, would take assets and family size into account.

"I am concerned we are squeezing qualified middle-income students out of the university," said Regent Tom Sayles, who proposed the idea. "I don't think we can continue to apply across-the-board increases."

About 58,000 of UC's 180,000 undergraduates have a family income of $90,000 or more, and an extra fee of just $1,000 would raise nearly $60 million. But (Larry) Hershman (UC VP for budgeting) aid it would have to be more, possibly $3,000 or more per student if it were really to make a difference.

Opponents, such as UC Regent Ward Connerly, suggest instead the high-tuition, high-aid approach that we've discussed before. As then, I find the numbers to cause my jaw to drop: Almost a third of the UC students come from families that are doing pretty well ($90k doesn't go as far in California as it does here in central Minnesota, but you wouldn't be hurting.)

Republicans are acting pretty silly on this one, as another article in the Washington Times quotes:

"I think that is outrageous," said Republican state Sen. Dick Ackerman, a graduate of the University of California at Berkeley. "There is already a significant program of financial aid and scholarships for people who can't afford to go there. You shouldn't be charging rich people more just because you can."
Except, you blockhead, that's exactly what markets do: Charge what you can, up to where marginal benefit equals marginal cost. And it's what we do with scholarships all the time. You already do it to out-of-state students, right? And the trustees there have already voted to charge out-of-state tuition to in-state students who have more than enough credits to graduate.

There's no free lunch here: There will be fewer subsidy dollars for state higher education in the near future, it is simply a matter of how you allocate them.

UPDATE: Cold Spring Shops suggests a different model.

The way in which it is being introduced is clumsy. Higher education already operates in the spirit of Adam Gimbel: nobody pays list price. The way in which the special discounts operates is cumbersome: everybody sees the same base price, then a special committee evaluates "need" and works out a price cut in the form of financial aid, or a subsidized loan. The formula by which this magic takes place is only slightly less convoluted than the PHRF rating system for keelboats (you can be first to Mackinac Light and not win the race) but it conceals the surcharge to richer families (their students don't get any financial aid.) Although the surcharge is isomorphic to the existing system, its transparency works against it. The universities might better have copied the airlines, where everyone confronts the same base price, but depending on when you book and a number of other things, you get a special discount.
Stephen also links to John Irons who links to an article on OMB Watch that includes this:
It appears that these increases are unnecessary, as there is strong support for public support of college and university students. The poll cited above {by none other than the Education Testing Service --kb} also found that �66% of respondents are willing to pay more taxes to increase financial support for college students, while 61% are willing to pay more taxes to increase support for colleges and universities.�

Finally, there is also strong backing for federal support of higher education. �Eighty-four percent (84%) of adults say that the federal government should play a significant role in higher education.�

Somebody forgot to learn about tax prices.