Alchian argues that the producers of higher education in a zero-tuition system are the only ones given any say regarding the quality of the institution. The best way to restore power to the consumers of this education is to give them purchasing power over the product. He claims that tuition should be raised and that students should be given vouchers of federal aid according to their need and their choice of institution. This will increase the power of the students, a desirable end for the author. With this method, institutions will have no recourse but to become more responsive to the needs of students.
Alchian also argues that since college-caliber students possess great wealth in the form of human capital, there are therefore no "poor" college students. He believes that subsidizing higher education is akin to subsidizing the drilling of oil fields; anyone capable of completing college has enormous wealth in the form of human capital, and will receive enhanced earnings from his or her college education. Therefore, subsidizing college education is an unnecessary and illogical process.
The author argues that "families and students should take more responsibility for financing their own educations, at the same time that public subsidies are targeted at low-income students." Saving and borrowing for college are emphasized, especially for middle-class families.
Baum prefers to see a shared responsibility between students and parents, with most of the burden falling on the parents, and subsidies and loans only being used by those families in which the parents are absolutely incapable of paying the costs of higher education. Baum believes that intergenerational equity is the most feasible method of assuring the long-term survival of higher education.
Baum also believes in higher tuitions as a means of assuring equity. She says that the current system can only assure inequity in the form of poorer persons subsidizing the education of richer persons at public institutions. Within the system of high-tuition/high-aid, parents would still hold the burden of responsibility, but would be given a more equitable deal in terms of costs.
(See Section One.)
This report discusses the various financial resources of students in different sectors of California Higher Education. Most important is the variability of independence among the different sectors. Community college students are most likely to be independent, and University of California students are least likely to be independent. As a direct result of this, the UC students have the most resources available to them, while community college students have the least.
There are two basic policy considerations made by this report. First, it questions whether the state-sponsored universities should continue to provide a subsidy to students whose parental income totals more than $96,000, and whether it should provide a similar subsidy to independent students whose income totals more than $60,000.
The second policy consideration entails asking whether the state can learn anything from the financial aid system used by private universities, and whether the state should use a similar system.
(See Section Three.)
The committee recommends that a high-tuition/high-aid approach be put into place across the United States to better target government subsidies on the truly needy.
The committee finds it very important to link tuition and aid strategies. They cite the lack of this link in creating many of the undesirable, high-tuition/low-aid situations that exist.
The basic recommendations of the committee consist of grants to low-income students and loans to middle-class students, with incentives for private giving and institutional achievement of social goals.
(See Section One.)
(See Section One.)
(See Section Four.)
(See Section Four.)
This book provides details concerning the current costs of higher education and the financial aid available. The authors recommend that financial aid become centralized at the federal level, with grants targeted at lower-income students and a federal direct-loan program focused on middle-income students.
After assessing the nation's current situation in terms of costs and access to our universities, the authors end the book with a series of policy recommendations. These include sweeping reform of the nation's system of financing higher education, beginning with a centralization of responsibility for student aid at the federal level. The authors argue that the federal government is the only agency capable of ensuring widespread social equity and progressivity.
Also included in their recommendations for reform is a call for more research in two areas: proprietary institutions and the comparative returns of different forms of postsecondary education. There is, according to the authors, surprisingly little information available regarding both of these fields, and a full-scale investigation into both is warranted.
Mortenson favors a high-tuition/high-aid plan as the best way to equitably subsidize the financing of higher education. For Mortenson, financing higher education is a good investment for society as a whole. If we do not invest in higher education today, then the costs of not doing so will be visited upon us later, and they will be much higher. These costs will be the costs of unemployment, of welfare, of basic literacy training, and of correctional facilities.
To avoid these costs in the future, Mortenson argues that the needs of those in the most disadvantaged groups must be met. To do this, institutions must charge tuitions much nearer to their actual cost of instruction. Through means testing, those able to pay this cost should do so, while those who cannot meet these costs will be given financial aid up to their ability to pay. This will end the current situation of public education, which involves low-income taxpayers financing the educations of wealthier students.
(See Section One.)
(See Section Four.)
Orfield explores the rapid rise in tuitions coupled with the dramatic decrease in aid for the very poorest segments of society. He does not address the issue of the causes of the rapidly expanding costs of college, but instead looks at how access to college has been affected by the increase in tuition coupled with decreases in aid.
Orfield does find a cause for the lack of federal funding for student aid, saying that it is largely a result of attempting to provide grant entitlements to the middle class. This has had devastating repercussions for the very lowest income groups, for whom the grants were originally intended.
This drop in aid, coupled with an enormous growth in the costs of higher education, has put a college education further out of reach for those who need it most desperately. To remedy this problem, Orfield suggests several solutions directed toward the most disadvantaged groups in society. He suggests that the first two years of college for very needy students be subsidized through grants and the last two years through subsidized loans. He also suggests ending the eligibility of ineffective institutions, and exempting from default penalties those schools that service "at-risk" students.
The targeting of these at-risk students is crucial for Orfield. He suggests eliminating middle-class eligibility for grants and increasing the scale of financial aid laws so that equal access to higher education may be attained by those currently at a significant disadvantage.
(See Section Five.)
Silber proposes the Tuition Advance Fund (TAF) which would involve the government fully financing higher education for anyone who attends college. Students would then pay back their debt up to 150 percent of the original loans through pre-arranged percentage income taxes. The main philosophic rationale behind Silber's plan is to begin treating students as individuals rather than dependents, and to place upon them the entire burden of financing a higher education. By taxing future income, the TAF would depend on a measure of the student's future, rather than the student's past. Because of the fact that college graduates have much higher lifetime earnings than those without degrees, Silber thinks that it is fair that they repay their debts.
The fund would become self-sufficient in ten to fifteen years, Silber says, and at that point would end the need for the massive number of federal agencies involved in financing higher education. It would simplify and streamline the system, using the already available facilities of the IRS to tax students' incomes. In twenty years or so, the fund could even begin repaying the government's initial outlays, and would become truly independent. This is, according to Silber, the only logical plan for financing higher education in the United States.
Topper claims that increases in the level of student debt cannot explain the decline in the share of students selecting liberal arts majors. He claims, rather, that this decline is due to the rise of older, part-time students who are financially independent. The author uses data from a survey of institutions and individuals, as well as average starting salaries for those in different majors. He also argues that at the same time that there has been a significant decline of students majoring in humanities, the salaries for those graduating with degrees in humanities has not declined.