The Big, Bold Idea at the Heart of Hillary Clinton’s Plan to Make College Cheaper
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There is a long and complicated list of reasons why Washington has failed to make higher education more affordable over the years. But in some ways, the issue boils down to a single, obvious problem. The federal government can give students money to pay for school, but it can't control what colleges charge. And no matter how much more aid it has handed out to families, the price of tuition has risen faster.
Why has tuition rocketed up? While I'm sure you'd love a 10-day explanation, here's the short version, as it applies to public colleges. First, schools are spending more than they used to running themselves. (For that, we can thank everything from luxurious lazy rivers on campus to the growing size of college administrations). Second, states are spending less than they used to subsidizing students. (For that, we can partly thank budget cuts that followed the recession, though disinvestment in higher education has been a long-running problem).
Over the past several months, Democrats seem to have coalesced around one big idea that could fix this fundamental dysfunction. It's a three-part bargain that goes roughly like this:
Part 1: The federal government should give money directly to states so they can refund their colleges and universities.
Part 2: The states need to quit their budget-slashing ways, and likely increase their funding for higher ed, much the same way that they cover a minimum amount of Medicaid spending.
Part 3: In order to qualify for the new wad of federal cash, colleges will need to keep their prices down.
This, more or less, was the basic outline of President Obama's plan for free community college, which he unveiled right before the State of the Union. It's also the core of presidential candidate Bernie Sanders' plan to eliminate tuition at all public colleges. And now, it's the centerpiece of Hillary Clinton's big new proposal to to bring down the cost of higher education, which she unveiled Monday.
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I posted weeks ago that a transaction tax would only harm the retirement funds of union workers and public employees, but it would not keep states from simply raising tuition to milk money from those same employees.
Hillary is smart enough to see the issue correctly, and proposes a way to make college free IF the states pay up and lower costs.
Bernie Sanders Robin Hood tax
http://www.sanders.senate.gov/download/collegeforallsummary/
Fully Paid for by Imposing a Robin Hood Tax on Wall Street. This legislation is offset by
imposing a Wall Street speculation fee on investment houses, hedge funds, and other speculators of
0.5% on stock trades (50 cents for every $100 worth of stock), a 0.1% fee on bonds, and a 0.005%
fee on derivatives. It has been estimated that this provision could raise hundreds of billions a year
which could be used not only to make tuition free at public colleges and universities in this country,
it could also be used to create millions of jobs and rebuild the middle class of this country.
http://www.thedailybeast.com/articles/2015/05/31/why-free-college-is-really-expensive.html
Why Free College is Really Expensive
Everyone knew Bernie Sanders would propose a tax on Wall Street. But spending that money on college tuition is a cynical handout to the upper-middle class.
Even Sanders himself, however, lists the Robin Hood tax as an afterthought; after all, if you raise a Robin Hood tax you can do a long list of things with the money you get from it (including cutting other taxes, or spending on other initiatives). The emphasis from Sanders’ statements is where the money will go: paying for tuition for public colleges.
The first problem with Sanders’ proposal is that a national tuition subsidy will be counterproductive even on its own terms. The proposal will cut the economic legs out from underneath innovations such as open online courses, which may be on the cusp of delivering low-cost, high-quality college education for all. Organizations trying to deliver radical new models will now have to compete against a $70 billion subsidy for the old system.
Additionally, directing that much guaranteed money into a system is a sure-fire way to accelerate cost inflation. The state may pick up the tab for tuition, but students will still have to pay for ancillary services (such as room, board, textbooks, etc.), and those services will go up in price. These costs are not trivial; for instance, although Sweden has abolished college tuition, students graduate with more debt than students in the United Kingdom, and only slightly less than students in the US. Through economic incompetence, Sanders’ proposal might hit the jackpot of reducing college quality while also increasing cost.
http://chronicle.com/article/Bernie-Sanderss-Charming/231387?cid=megamenu
Bernie Sanders's Charming, Perfectly Awful Plan to Save Higher Education