Higher Education: Who Else Should Pay?
October 14, 2010
A recent report from the Independent Review of Higher Education Funding and Student Finance in Britain says higher education should be paid for by those that benefit from it: graduates, says Mark Harrison, a professor at the University of Warwick (U.K.) and a research fellow at the Hoover Institution.
It looks like a no-brainer, says Harrison, yet lots of people are showing signs of moral outrage.
A question the critics seldom address is: Who else should pay for the degree? The taxpayer is usually implied. But here's the problem: tax-financed higher education involves a lot of poor-to-rich redistribution.
Today's students are a large chunk of tomorrow's wealthy. Today's taxpayers, in contrast, extend well into the ranks of the poor.
- In the United Kingdom, you start paying income tax at an annual income of just £6,475 ($10,250).
- Under the report's proposals, student loan repayments won't kick in until annual income reaches £21,000 ($33,265).
- If the graduate's income doesn't make it to that height, the person pays nothing.
The private net present value of a degree, according to the report, is at least £100,000 (about $158,000). If you include the "social contribution" from today's taxpayer, then it's a little more. For the sake of argument, let it be £120,000 ($190,000).
Critics put the likely burden of student "debt" under the proposed arrangements at "well over £40,000 ($63,600)."
That sounds bad, but £120,000 minus £40,000 would still leave around £80,000 ($120,840) to enjoy, says Harrison.
Source: Mark Harrison, "Higher Education: Who Else Should Pay?" Mark Harrison's Blog, October 13, 2010.
Browse more articles on International Issues