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Monday, April 24, 2017

New York Wants Its Students to Learn at the Expense of Everyone Else

Free tuition means even good students might not pay for the education they benefited from. Not all "good jobs" pay well.

New York is adopting free tuition under the Excelsior Scholarship. “Excelsior” is a reference to the state’s motto, and supposedly how lawmakers envision the recipients. But if students will be reaching “still higher,” they will do so while standing on the backs of others.

Not a Lifeline

College is not food. It is not shelter. You don’t need it to live. You don’t even need it to live well. Despite Mr. Cuomo’s insistence that a college degree is necessary for success, it is simply not true that the only path to a good job must involve dozens of hours in general education classes.

College is neither necessary nor sufficient to get a good job. It makes little sense to make it free for so many.High school graduates are awash with alternatives. Electricians, nurses, dental hygienists, plumbers, HVAC mechanics, and many others all pay well above the median U.S. salary. None of these require a four-year degree. But they aren’t the office jobs twenty-somethings dream of and so these openings remain unfilled.

College is neither necessary nor sufficient to get a good job. It makes little sense to make it free for so many. Excelsior attempts to address this concern with its residency requirement: recipients must live and work in the state of New York for the number of years they benefited from the scholarship (generally four). But that scheme won’t work so cleanly.

Free tuition advocates imagine all students will land jobs with hefty incomes and fat tax bills. They assume all majors are equally employable, all graduates are equally competent, and all “good jobs” are equally paid. They are in for a shocking surprise.

The Inexperienced and Ineffectual

Efforts to make every graduate pay their tuition through the tax system will fail. Unless the Governor has some big tax hikes on the horizon, working for four years is unlikely to cover the $25,000 tuition tab. New graduates lack the experience needed to acquire plush wages so quickly.

It’ll be even worse for the mediocre students, and there will be many of them. Excelsior requires recipients to “maintain a grade point average necessary for the successful completion of their coursework.” In other words, a C average is perfectly sufficient for a free ride.

Teaching a good student costs the same as teaching a mediocre one. But good students gain much more from a college education. When students pay tuition, the mediocre ones are more likely to steer clear of this costly service, saving themselves and the schools money. Shielding everyone from the true cost of their education prevents this desirable outcome.

A barely passing GPA does not make for good job prospects. Those struggling to meet even this standard will opt for easy majors. Lackluster students will land lackluster jobs. Other taxpayers will foot some of the bill. The rest of the tab will be passed on to future generations.

Untaxable Compensation

Free tuition means even good students might not pay for the education they benefited from. Not all “good jobs” pay well. You don’t rake in the dough working at a nonprofit.

Free tuition means even good students might not pay for the education they benefited from. Not all “good jobs” pay well.Adam Smith noted out that different jobs naturally have different working conditions. Some jobs are exciting and others are boring. Some are prestigious and others are dangerous. Some have flexible work schedules and others require strange or long hours. As applicants line up for the desirable jobs, wages fall accordingly.

College is the first time in most people’s lives where they get to truly customize their education. Their field of study determines not only a large share of what classes they’ll take but also the skills they’ll develop and what it says about them as a person. It’s no wonder employability and salaries vary widely by major.

It’s fine to take an enjoyable job if you don’t expect strangers to pay for your education. But you cannot tax personal fulfillment. Compensation with flexible hours won’t help keep your alma mater’s lights on. Even good students or students who could have covered loan payments might not pay for their education through the tax system.

Without loans to worry about, graduates are even more likely to pursue jobs with non-pecuniary benefits. They will learn and live on the backs of others. Especially those with unpleasant jobs.

Irresponsible Solution, Phony Problem

Student debt is not nearly as scary as the headlines make it out to be. Most of the burden is due to graduate students, dropouts, and for-profit colleges. Average student debt in 2014 was $29,000, but the median debt was just $8,500. And that’s only for the people who have any debt at all. In an effort to meet a perceived threat, New York State offers a perceived solution.

Economists understand how important it is to keep the price paid in line with the costs incurred. Disconnecting the two creates waste and opportunism. The Excelsior Scholarship will encourage overinvestment in mediocre students and underpayment from good students. Future generations will learn that “still higher” is really a reference to the debt they’ll be saddled with.

  • David Youngberg is an associate professor of economics at Montgomery College in Rockville, MD.