Tuesday, May 29, 2007

The Tuition Freeze Movement

By Richard Vedder

One way to reduce tuition hikes is to outlaw them. Ordinarily, I abhor price controls, noting that they lead to shortages and often a decline in the quality of the controlled good or service. Yet higher education markets are highly controlled and manipulated to begin with, with the government subsidizing major suppliers (state universities), providing financial assistance to demanders of their services, etc. Public policy has contributed, I think, to the tuition price explosion, so the attempts of politicians to freeze tuition fees or moderate their growth are not surprising, and perhaps even marginally useful in controlling the cost explosion.

Governors Charlie Crist in Florida and Ted Strickland in Ohio are polar opposites, one a pretty conservative Republican and one a rather liberal Democrat. Both, however, want to constrain tuition increases. In Florida, the University of Florida and Florida State want to be able to raise tuition fees a lot and "invest" in achieving national competitive status. That usually translates into taking incremental dollars from students and devoting it to enhancing research programs, paying big salaries to new research professors, etc. Crist has said "over my dead body." He seems to saying, "if they want state subsidies, those funds will be used to keep college affordable to all --not to engage in a costly academic arms race to increase one's national rankings." In Ohio, Strickland, a Democrat working in tandem with a Republican-controlled legislature, seems to have broad acceptance of a two year plan that will allow tuition rates to rise less than the overall rate of inflation, in returns for greater state subsidies.

I am of two minds about all of this. In general, I favor tuition fee price competition over price fixing, institutional autonomy over central direction, and students paying for their own education instead of third parties doing so. The prime beneficiaries of a college education are the students educated, and most of them should pay their own way, or at least a healthy proportion of it. Moreover, I have earlier argued that we are "over invested" in higher education, meaning we are overly obsessed with providing access to every student wanting to try to go to college, no matter what the social cost or risk of failure. These are all arguments against what Crist and Strickland are trying to do. On the other hand, in many ways, the colleges have brought on this strong-armed behavior themselves, by letting their hubris to lead them to engage in costly policies (big spending increases) that are highly dubious on cost-benefit grounds. In a perfect world in my opinion, these problems would not exist, because governments would largely exit the higher education enterprise, with private charity helping those of limited means attend school. But that ideal world does not exist.

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