Public funding for higher education fails students and taxpayers


Government meddling in competitive industry invariably hurts all citizens, and higher education is no exception. America has the highest tuition rates in the world. Only the federal government could lose $170 billion on the student loan program within nine years and spend another $148 billion of public funding on college annually. In a country of nearly 328 million people, that equates to almost $500 per person per year. Decreasing funding for this college-industrial complex would allow for more money to remain in people’s paychecks while reducing the financial burden to obtain a degree.

Taxpayer-funded financial aid allegedly helps alleviate tuition costs, but it actually increases the total financial burden. A Federal Reserve Bank of New York study concluded that for most forms of financial aid, a one dollar increase in aid caused an average tuition increase of 60 to 70 cents. Government assistance may slightly decrease a student’s initial out-of-pocket cost, but they will pay drastically more in the long run, as will the taxpayer.

Lack of competition also contributes to excessive tuition rates. Universities generally do not reveal the true cost of attendance to prospective students until after they are accepted. Combined with time-intensive and often expensive applications, students are often limited to applying to just a handful of schools that are realistic for them. For students from low-income families or those who live in rural areas, the logistics of attending an institution of higher education exacerbates this problem, resulting in de facto monopolies and inflated costs.     

Today, a free-market alternative to educational cartels is available. Accredited online universities now offer diplomas that are indistinguishable from those earned on campus. Roughly 30 percent of university students were enrolled in an online course during the fall of 2015, a figure that has grown consistently despite drops in total university enrollment.

The nature of online learning has promoted competition and subsequently driven tuition at several institutions below $5,000, a bargain compared to the $25,409 national average at a four-year institution. As online colleges gain market-share, competition and economies of scale will drive these affordable prices even lower.

Resources like Coursera and other Massive Open Online Courses (MOOCs) have shown that providing an entire university curriculum online for free is possible, but these classes charged fees for grading submitted work. Again, the free-market provided a solution in the form of software. Automated essay scoring systems are now affordable and more accurate than humans. With this final hurdle behind, completely free degrees are within sight. In addition to this perk, some online institutions offer free textbooks, flexible scheduling and enrolled students do not incur expenses for room and board or transportation.

Die hard supporters of public college funding wrongly assume that taxpayer money is necessary to make college affordable. However, many employers are enthusiastic to help employees pay for degrees. Starbucks, for instance, recognizes the increased productivity and value of educated workers, so the progressive coffeehouse offers full tuition reimbursement towards bachelor’s degrees for employees who have been with the company for three months and work 20 hours per week. Many other firms have similar programs, including AT&T, UPS and Bank of America.

Alternatively, one could pay tuition using Income-Share Agreements (ISAs). These involve investors paying college expenses for a student upfront in exchange for a portion of postgraduate earnings. The libertarian economist Milton Friedman proposed ISAs in 1955 and similar public arrangements are standard in Australia, and the United Kingdom. Compared to the US, these countries have populations with higher percentages of college degrees and children of uneducated parents are more likely to attend college in these countries.

Additional options include private loans, sponsorships and scholarships. The individualized nature of each makes them vastly superior to blind bureaucratic spending. A couple in Jackman, Maine recently demonstrated this by creating a specific scholarship upon realizing that there was not a certified plumber within 50 miles. A fully-privatized system would respond to market demand in this manner while sparing the wallets of taxpayers. Further, this would allow investors and donors to be more involved in selecting and supporting students, both in college and the workforce.

Reckless spending has only managed to increase the cost of higher education and flood the market with unqualified job seekers. Defunding these disastrous programs would save money for students and taxpayers while enriching investors and allowing market demand to promote the careers society desires.

About Erik Christensen

Erik Christensen is currently pursuing a B.S. in Government at Liberty University. He is a strong supporter of limited government and his favorite activity is political debate. He can be reached at

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