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Two Cheers for US Higher Education

1 points by barry-cotter 4y ago

barry-cotter 4y ago
> Student loans are a form of subsidy > It’s important to recognize that student loans are a subsidy to students and to colleges. The typical framing from the left is to characterize student debt as a deficit — a deficit that should be filled by direct government subsidies. But the student loan program is itself a subsidy relative to a pure market system. It allows people to spend more on college tuition than they would otherwise be able to spend. That helps some people be able to afford college who otherwise couldn't afford it. > But it also allows schools to raise their total spending (and therefore tuition) over what would otherwise be possible. And I think we see that this is what happens. I’ve been to the campus of the University of Minnesota and also to the campus of the University of Helsinki, which is the top school in Finland. Finland and Minnesota are about the same size, and Minnesota’s appropriation to the University of Minnesota is about the same size as Finland’s subsidy to the University of Helsinki. But Minnesota has twice the number of undergraduates and about three times the staff. It also has a nicer campus — starting with the fact that it’s a coherent campus instead of being scattered across four different clusters in the Helsinki area. > If you add it all up, the University of Minnesota’s average annual budget of $4.2 billion dwarfs the University of Helsinki’s 703 million euros. > So while a person might take the position that Minnesota should simply cut a much larger check to its flagship university than Finland does, copying the Finnish approach in practice would mean shrinking the university and making it more austere. What American higher education lacks in direct appropriations it more than makes up for with credit and tax deduction programs that funnel additional private resources into the higher education sector. If you look across the G7, you’ll see that despite our relatively paltry direct higher ed spending as a share of GDP, we send a lot of kids to college.

1 points by barry-cotter 4y ago

> Student loans are a form of subsidy > It’s important to recognize that student loans are a subsidy to students and to colleges. The typical framing from the left is to characterize student debt as a deficit — a deficit that should be filled by direct government subsidies. But the student loan program is itself a subsidy relative to a pure market system. It allows people to spend more on college tuition than they would otherwise be able to spend. That helps some people be able to afford college who otherwise couldn't afford it. > But it also allows schools to raise their total spending (and therefore tuition) over what would otherwise be possible. And I think we see that this is what happens. I’ve been to the campus of the University of Minnesota and also to the campus of the University of Helsinki, which is the top school in Finland. Finland and Minnesota are about the same size, and Minnesota’s appropriation to the University of Minnesota is about the same size as Finland’s subsidy to the University of Helsinki. But Minnesota has twice the number of undergraduates and about three times the staff. It also has a nicer campus — starting with the fact that it’s a coherent campus instead of being scattered across four different clusters in the Helsinki area. > If you add it all up, the University of Minnesota’s average annual budget of $4.2 billion dwarfs the University of Helsinki’s 703 million euros. > So while a person might take the position that Minnesota should simply cut a much larger check to its flagship university than Finland does, copying the Finnish approach in practice would mean shrinking the university and making it more austere. What American higher education lacks in direct appropriations it more than makes up for with credit and tax deduction programs that funnel additional private resources into the higher education sector. If you look across the G7, you’ll see that despite our relatively paltry direct higher ed spending as a share of GDP, we send a lot of kids to college.