In a May 1 column in The Oklahoman, University of Oklahoma president David Boren sent up a loud cry of “Wolf!” over the prospect that Oklahoma may do what quite a few other states are doing – shifting some of the burden of paying for the state university system from the taxpayers to students and other parties who are willing to donate money. Mr. Boren finds this “alarming” because it “threatens to close the door of opportunity.”
There is no wolf. Indeed, Oklahomans should look at the idea of shifting the cost of the state’s university system the same way they would look at a little lamb. It’s something pleasant, not something frightful.
Mr. Boren correctly points out that some states (he mentions Colorado and Virginia, and there are others) have consciously reduced the level of state appropriations for higher education. The universities have increased tuition and have been beating the bushes for added private funding as a result.
When he suggests that reducing governmental subsidies for higher education will close the door of opportunity, however, Mr. Boren ignores readily available facts that show increases in the numbers of students enrolled in state two- and four-year institutions in Colorado and Virginia. In Colorado, the number of students enrolled in public colleges and universities in 1999-2000 was 209,183. By 2004-05, despite the reduction in government appropriations, the enrollment figure had increased to 222,815. (Data are from The Chronicle of Higher Education, almanac editions for 1999-2000 and 2004-05.)
In Virginia, the story was the same. Enrollments increased from 292,412 to 326,758. The enrollment numbers from Colorado and Virginia are not consistent with Mr. Boren’s worry about the loss of opportunity for people.
What Mr. Boren overlooks is the great capacity of people and institutions to adapt to change. When students for whom a college education would be a good investment find that its cost has risen, do they (and their parents, school counselors, and others who care about their future) simply give up? Of course not. Even students from very poor families can find ways to deal with an increase in cost.
There are many, many scholarships available to students with limited means. Another option is to enter into a human capital contract with lenders, who cover some or all of the cost of education in return for a promise to pay a percentage of earnings for a number of years after graduation. One company in this business is My Rich Uncle. It has been arranging human capital contracts since 2000. (For more information, visit the firm’s website at www.mru.com.)
Keep in mind that most college students are not from poor homes and can easily afford to pay somewhat more for their college education. Mr. Boren fails to ponder the ethics of taxing all citizens so that the children of wealthy families can enjoy subsidized degrees from places like Oklahoma and Oklahoma State.
Looking at this question from the standpoint of efficiency, there is much to be said in favor of the policy of reducing state support for higher education.
Richard Vedder, a professor of economics at Ohio University who has written and spoken for OCPA, points out in his recent book Going Broke by Degree that American higher education suffers from very low productivity. In contrast to almost every other industry, per unit (pupil) costs in education continue rising. It keeps costing more and taking longer to educate students to any desired level of proficiency.
Why is that? Mainly because colleges and universities don’t have to pass the test of the market. Students and institutions are subsidized to a considerable extent, so the schools can get away with a lot of needless spending and frivolous course offerings. These days, parents and taxpayers spend gigantic sums in order to produce college graduates, many of whom have lower basic ability levels than did high school graduates of 50 years ago.
The advantage of putting the burden of paying for higher education on willing parties is that they can more easily say “no” and look for other options than politicians can. When people are spending their own money, they tend to weigh costs and benefits carefully. That, in turn, causes institutions to be more mindful of costs and benefits and more accountable for results.
In short, the trend that Mr. Boren laments is a trend away from a socialist model, where government taxes everyone to provide goods and services, and toward a market model, where providers of goods and services have to compete to win the favor of consumers.
It’s a healthy trend. Don’t worry about it.
George Leef is the executive director of the John W. Pope Center for Higher Education Policy in Raleigh.