No class: Bill Clinton's education-as-entitlement programs threaten to reverse positive trends in higher education - Editorial

Reason, May, 1997 by Virginia I. Postrel

So tuition increases are finally decelerating. "Although there is no evidence that the University is losing a significant number of students because of the cost of a Princeton education,...large tuition increases in the face of the growing public concern about the overall cost of higher education would be contrary to the long term interests of the University," declared that school's budget-setting Priorities Committee, recommending a 4.9 percent increase in tuition and fees for 1996-97 not exactly modest, but the smallest jump in two decades.

Into this evolving situation blusters Bill Clinton, trying to buy students' love. His plan is twofold: First, he calls for making "the 13th and 14th years of education - at least two years of college - just as universal in America by the 21st century as a high school education is today." To do that, he would provide a $1,500-a-year tax credit for tuition, as long as the student maintains a B average. Second, he proposes a $10,000 tax deduction for any post-high-school tuition.

The immediate effect of both plans would be to push up tuition. As David Henderson notes in Fortune, the average tuition at community colleges was only $1,114 in 1994. Clinton's dollar-for-dollar tuition credit "would make college students paying less than $1,500 in tuition unconcerned about increases" because the federal government, not the student's family, would be footing the bill. In other words, the average community college tuition could rise to $2,614 before the effective cost rose at all. Pressures to keep costs down would be severely reduced. (Since most community college students work and go to school only part-time, there's even more room for unnoticed increases than these figures suggest.) Those painless price hikes would not only give schools an incentive to increase overheads but also make the tax credit all but impossible to remove, lest large numbers of people be priced out of the market.

But the tax deduction is almost as bad. It lowers the cost of tuition by the tax rate - say, 28 percent - so that the first $10,000 of tuition actually costs only $7,200. That means those schools can go right back to jacking up tuitions. They'll still feel competitive pressure, but only after they've raised their prices to the post-bribe equivalent of today's levels. Again, the critical fact is that the supply of higher education is more or less fixed. Increasing demand simply drives up prices.

But what's truly worrisome about Clinton's education plan lies in his belief that two years of college should be a universal entitlement - as common as high school and just as meaningless. Already, community colleges give far too many students the education they should have gotten in earlier years. (Nor is this role unique to nonselective two-year schools. California State University branches, which accept students in the top 25 percent of their high school classes, devote enormous resources to remedial education.) By requiring a modest entry fee and maintaining the special aura of higher education, community colleges screen out the people who don't want to be in school. Many will accept anyone with a high school diploma or its equivalent; selection is based not on the student's academic record but on his or her willingness to work. As a result, students actually have a chance to learn. Their teachers do not have to worry about maintaining basic discipline or giving assignments no one will complete.