Economist Warns Against Tuition Increases

Copyright 1992 by D.H. Myers. All rights reserved. For personal use only.

For many decades, Americans have been subjected to a lot of propaganda about going to college and getting a degree as a ticket to a better life. The statistics clearly show that college grads have much more income capacity than people who do not gra duate. During the 1980's, college graduates gained excessively over non-graduates, and are only now beginning to complain about the shrinking economic pie. But major U.S. publications still report that college graduates are prominent in the top 20% of t he U.S. individual income scale.

Today, the U.S. workforce is composed of only somewhere between about 15% and 25% college graduates. Other statistics point to an average lifetime differential of about $1,200,000 between having and not having a degree. This represents scandalous returns on the college investment. Not bad for a participatory share in a not-for-profit enterprise.

The logic of the tuition increases well over the general inflation rate, all over the country, can not realistically be separated from this investment factor. Future earnings are assumed to compensate for the new tuition increases several times over. It would be found that most of the "super-rich" parents who are being targeted publicly by administrations of even the so-called public schools, like the University of California, are living examples of the earning capacities of their own degrees.

If progressive socio-economic restructuring occurs, this earning capacity advantage could collapse. But until then, the students who are obviously less affluent than graduates could easily recognize that the new financial burdens from the tuition in creases are discriminatory.

An Alternative: Taxing the Graduates?
Pros and Cons

It is interesting that none of the current political candidates, nor anyone else in government, has proposed an across-the-board special tax on academic degree-related income, the same way tuition increases are generally spun-off. Graduates who are o bviously benefiting from their welfare degrees are in a much better position to support schools like the University of California than currently enrolled students. A likely reason why this type of special tax on academic credentials has never been public ly discussed before is that the people controlling the tax laws all have college degrees.

A strong reason for not levying such a tax would be that graduates are likely to increase their already excessive and disproportionate claims on society's wealth in order to support their new tax habits. In other words, graduates might try to get income increases to compensate for the special tax. This would mean fewer resources for the lower end of the employment and unemployment ladder. An example of this tendency is readily seen in panic articles in newspapers about college graduates' salaries not keeping up with inflation. But theoretically, salary gouging of this nature could be controlled.

The allocation of the proceeds of a special tax on college graduates would also be problematic. The circle of self-dealing between common credential holders would not be broken if the tax were earmarked for the universities as they are currently operated. The state's taxing power would merely be an extension of its current status as a funding device for the special, private interests who bank on degree and admission requirements.

But if the same de facto tax burden is imposed upon today's students in the form of tuition increases, the same excessive compensatory claims will be imposed upon the rest of society in the not-so-distant future. Higher pay and longer employment tenure (inflationary), more stringent selection requirements (protectionism) and other excessive benefits will be thought of as "just" rewards for the "suffering" which students would now experience due to the tuition increases. Students are likely to claim that they will have to pay back their rich parents for their increased monetary contributions, not to speak of increased student loans. But in reality, the underclass would characteristically have to pay for all of this, in terms of real opportunity obstruction, resource deprivation, and oppression costs.

Untouchable Dorm Mates

Tuition increases tend to pit rich students against poorer students, thusly affecting the learning climate. Poorer students already feel the inequalities of not having a powerful personal computer and laser printer like perhaps their richer dormmates, or a Porsche, or a vacation home, or a Christmas break in Guadalupe, a camcorder, dinners at expensive restaurants, a fat bank account, a bar-cheater's review course, and a racy boyfriend or girlfriend as part of the rich-kid's benefits package. The demoralized poorer students will more increasingly risk being thought of as parasites, sex bogeys, and thieves, living off the rich. Rich students will inevitably assert leverage and excessive influence over poorer students. Poorer students might become trained to give r ich students ideas for their term papers and dissertations in order to "prove their worth".

In conclusion, the current tuition increases and existing price levels do not even represent a good "quick fix" to a more important set of problems of a much larger dimension. A special tax on all graduates represents a marginally fairer option, but with its own foreseeable problems which would have to be dealt with. 1