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Taxation U.
The real college-cost story has been ignored.


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Neal McCluskey

Amidst all the woeful tales of college students over-burdened with tuition and college loans, the real college-cost story — that it’s taxpayers who are truly suffering — has been ignored.

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Here’s reality. According to the National Center for Educational Statistics, more than half of public university revenue — $79 billion — was extracted directly from federal, state, and local taxpayers, while only 18.5 percent came from student fees and tuition. The bill for private schools was smaller, but still mammoth: 16.4 percent of private college revenue — $12 billion — came directly from taxpayers, with tuition and fees providing 43 percent.

Of course, tuition, too, is covered largely by taxpayers. According to a new report from the College Board, a national, non-profit schools association, “Almost 60 percent of undergraduates receive some form of financial aid to help them pay for college. While a significant amount of this aid is in the form of loans, frequently subsidized by the federal government, over $40 billion of grant aid was distributed to college students by federal and state governments and by colleges and universities” last year.

Schools and students, naturally, say they need these huge subsidies. However, an October New York Times article, “Jacuzzi U.? A Battle of Perks to Lure Students,” suggests this is hardly the case:

[Campus recreation director] Kathy Anzivino believes there must be some pinnacle of amenities that universities simply cannot surpass, some outer limit so far beyond the hot tubs, waterfalls and pool slides she offers at the University of Houston that even the most pampered students will never demand it and the most recruitment-crazed colleges will never consent to put it on their grounds.
Yet David Rood, a spokesman for the National Association of College Auxiliary Services, says the “base minimum is a thing of the past. There is a lot of one-upsmanship going on. Whatever the students want is pretty much what they’re getting.”

Such as, reports the Times,

· A Penn State student center featuring “two ballrooms, three art galleries, a movie theater with surround sound and a 200-gallon tropical ecosystem with newts and salamanders … and a 550-gallon salt-water aquarium with a coral reef.”

· “[A] 657,000-square-foot complex featuring kayaks and canoes, indoor batting cages and ropes courses, massages and a climbing wall big enough for 50 students to scale simultaneously” being built at Ohio State.

· University of Southern Mississippi’s planned “full-fledged water park, complete with water slides, a meandering river and something called a wet deck — a flat, moving sheet of water so that students can lie back and stay cool while sunbathing.”

Taxpayers, fortunately, don’t cover all the costs of these Carnival Cruise-like attractions. They’re financed largely by student fees of a few hundred dollars a year paid over several decades, fees students accepted when pushing for these projects. Of course, “future classes of students and the parents who support them will have no say at all” — the college-cost problem in a nutshell.

People simply don’t care how much something costs if they’re not paying. Many students — while crying poverty — gladly support on-campus amusement parks for which others must pay. Nationally, as long as taxpayers cover most college costs, students will demand endless frills, ignoring institutions that don’t furnish them.

Unfortunately, congressional proposals to contain costs won’t help. The Affordability in Higher Education Act, sponsored by Rep. Howard P. “Buck” McKeon (R., Calif.), would impose price controls, threatening revocation of federal funds for schools that raise tuition and fees too fast. This would actually produce the opposite of taxpayer relief: State politicians, lest their colleges lose federal money, would transfer a greater burden to taxpayers, keeping their schools’ “sticker prices” low. Tuition-reliant private schools, in contrast, would have to seek aid increases, and might abandon projects that would have allowed them to compete with their heavily subsidized public cousins.

As bad as McKeon’s bill is, the alternatives are worse. The College Opportunity for All Act, sponsored by Rep. George Miller (D., Calif.), would raise federal Pell grant maximums from $4,050 per-student this year to $11,600 in 2011, and make it easier for students to borrow money. A similar measure from Sen. Edward M. Kennedy (D., Mass.) would make borrowing for college cheaper. Even less of the cost of college would be borne by its consumers — inflation would continue to grow.

Higher education devours every dollar it can sink its teeth into, but its victims aren’t students. They actually feed the beast, demanding more and more goodies for their colleges. No, the victims are the nation’s taxpayers, and it’s time the word got out.

— Neal McCluskey is a policy analyst with the Center for Education Freedom at the Cato Institute.



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