Sunday, October 22, 2017

The Myth of 'Free College'

The Myth of 'Free College' 

The Myth of ‘Free College’

Thomas Sowell once showed how if we took all the money spent, at all levels of government, on programs ‘for the poor,’ and simply gave that money to the bottom 20% of income earning households, it would be enough to move every one of them into the top 20% of income earning households.  As crazy as it sounds, we spend enough on programs ‘for the poor’ to quite literally make them rich, and yet we still have poor.  What gives?


It turns out that most of the money spent on programs ‘for the poor’ actually goes to the rich and middle class, and ‘Free College’ is the perfect example.
Under our current system, those who go to college pay, and they can take out student loans, such that they pay for college after attending.  Typically, student loans are repaid over ten years.  Deferments are available for those in hardship, and once one finds a decent job, and pays their loans back (typically around age 35), they are done paying for college.
I’m 46 as I write this, and I am still paying student loans.  I am in fact still going to college, finishing my second Masters degree.  I am the exception to the rule, however, having spent eight years in the military first, and having pursued two advanced degrees and a bachelors.  I am exactly the kind of person who would have benefitted most from a ‘free college’ program, and yet I am against such a program.  Why?  Because I can afford my own student loans, and it would be extremely unfair to make people who earn less than I do pay for my schooling, when I am the one reaping the benefits.
My income reflects my education, as it should.  I was careful to pick degrees that were in demand, and I considered the return on investment before taking out loans.  I did not get degrees in underwater basket weaving or transgendered ballet, but in computer science, business, and lean manufacturing.
When one buys a house, the benefit occurs over time, after the purchase, so it makes all the sense in the world to pay the house off while living in it.  So too, with an education the benefit starts after graduation, and it makes all the sense in the world to pay for the degree after earning it.  A degree is an investment in one’s future.
I heard a rumor that at some schools, when they hand out political science diplomas, they ask the new graduate, “Would you like fries with that?”  I would never get a political science degree, so I have no way of knowing if this rumor is true, but I do know that if student loans were all private, there would be no degrees in underwater basket weaving or transgendered dance theory, and yet there would still be degrees in engineering.  Unlike government, private lenders would consider the return on investment before giving out loans.  Even with government loans, parents and students should consider the return on investment in choosing degrees.  Where students do that, they have no problem repaying their student loans.
The average student loan payment, today, is $280 per month ($3,360 a year), for ten years.
Those who want ‘free college’ want a program in which college is paid through tax dollars.  According to the US Department of Education, the cost of ‘free college’ would be $62.6 billion a year.  Today, 20% of the public gets a bachelor’s degree, and the US Department of Education estimate assumes similar trends going forward.  That’s silly since most things explode in demand when ‘free’.
If we assume that everyone would get a bachelor’s degree, were college ‘free,’ that number goes to $313 billion a year.  Even if 20% of the public does not take advantage, it’s still $250 billion a year.  That’s going to cost each working American (there are 100 million of them) $2,504 per year.
Let’s run the math on this.  Under today’s student loan system, the average student will pay $33,600 over ten years.  Under a free system, the average worker will pay $2,054 per year their entire working career (average 35 years), for a total of $87,640.
Are you better off paying $33,600 for yourself to go to college, or $87,640 for other people to go to college?  Is it fair to tax those who do not go to college to pay for those who do, when those who do not go to college earn, on average, far less than those who do?
Even if we assume, as does the US Department of Education, that making college ‘free’ will not lead to more people going to college, it will still cost every working American $21,910 in taxes, over the course of their working lives, and that will be paid both by those who go to college, and by those who do not.  Those who go to college might not start out in the top 20% of income earning households, but virtually all of them will wind up there.  Is it fair to charge people who are in the bottom 20% of income earning households, to pay for the degrees of people who are destined to be in the top 20%?  On what planet is that moral?
Someone is going to say that only the rich will pay the new taxes.  OK.  Let’s look at the math on that.  Now, instead of 100% of working adults paying, only 20% will.  That makes the $21,910 grow to $109,550, and since those who go to college almost invariably work themselves into the top 20%, you are going to pay that yourself.  Do you want to pay $33,600 for yourself to go to college, or $109,550 for other people to go to college?  And that’s assuming that making college ‘free’ does not lead to more people going to college.  Real costs could be much higher.
There is no way to spin the math on this where it will make ‘free college’ free, and the only way those who go to college benefit is if those who do not go to college help foot the bill.  Unless you like the financial equivalent of shoving hot nails into your eyeballs, or you think there is some planet in the galaxy where it is fair to tax the poor to feed the rich, you could never support such a program.
Here is some free advice from someone with a lot of student loans: pay for your own college, just like everyone else, and stop whining about it.  Adults pay their own way.

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