Why Not "Free" Higher Education?
08 March 2016 | Pago Pago, American Samoa
International and domestic students get a high quality education in Norway at little to no cost. The Norwegian government finances education with taxpayers' money so foreign students along with native students can enjoy a free ride at state universities. Many countries in northern Europe and elsewhere have either free higher education, or extremely low tuition and grant aid that offsets it for most students. These include many countries in Northern Europe including Denmark, Finland, Iceland, and Sweden, in addition to Norway. German universities charge markedly reduced tuition rates. Many countries elsewhere also provide for free college educations. The US is the exception among advanced nations.
These northern European countries have average effective tax rates of from 49.3 to 37 percent as compared to the US rate of 31.5 percent, even though US per capita income is actually much higher on average than in most of those countries. They would seem to value advanced education more highly than we do even though they can least afford it. Again, we are the exception.
According to new Department of Education data, the government would need to spend $62.2 billion dollars to make public college tuition free. That is the amount collected from undergraduates in 2012 across the entire United States. This compares with our "defense" budget of $680 billion in 2012. The direct costs to the US of the wars in Iraq and Afghanistan by the end of 2008, came to. approximately $900 billion. Discretionary spending, not including interest costs for the 2015 budget was $1.11 trillion or 29 percent of the budget. Guns and butter, but not education, would seem to be our motto.
Over the next decade, it has been estimated that the federal government will make a profit of over $110 billion on student loan programs. This is morally wrong and it is bad economics. Student loans recall can not be refinanced when interest rates drop, nor can they be discharged in bankruptcy. As a financial predator, Wall Street insisted on those usual provisos. Even credit cards can be refinanced.
The cost of a free college education for all qualified would likely come to about $75 billion a year over and above what the states are already paying by way of subsidies. This sum could be fully paid for or more by imposing a tax of a fraction of a percent on Wall Street speculators who nearly destroyed the economy seven years ago. More than 1,000 economists have endorsed a tax on Wall Street speculation and today some 40 countries throughout the world have imposed a similar tax including Britain, Germany, France, Switzerland, and China.
Alternatively or additionally, a slight bump in the capital gains tax, which is on income mostly garnered from unproductive rent seeking activities, could do the same thing. Eighty percent of the income of the top one percent is in the form of capital gains, mostly from rents. If the taxpayers of this country can bailout Wall Street, GM and Chrysler and subsidized farmers, big Oil and big Pharm, we can certainly make public colleges and universities tuition free and have students be debt free throughout the country.
So what are the real arguments against a free college education for all qualified? Two, as I see it, when the sophistry is stripped away. One is too many of America's working aged unemployed, who would likely pursue such a college education, are too lazy and stupid to succeed at such a program, and, secondly, groups of financial prey for Wall Street would be removed from Wall Street's and the government's clutches. The first argument fails by definition, by limiting aid only to those qualified. That leaves only the second reason -- Wall Street would not like free college for all qualified because it would be deprived of a means of making money. So why should Wall Street control the public interest and call the shots here?
Is their any serious question about what we should do about this matter?