College tuition help, or mortgaging our children’s future?
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- February
- 27
Am I being greedy for liking the prospect of saving $2,500 each year I have a kid in college? In my case that could add up to a total savings of $20,000. I have two sons who would be attending undergraduate school back to back – One will finish (I hope), just as the other is set to start (I hope).
If you haven’t been able to keep track of all the financial news coming out of Washington, D.C., these are the broad strokes:
– Already approved in the federal stimulus package are two years of $2,500 federal tax credits for college expenses.– Those annual tax credits would become permanent under the President’s proposed budget. Of course this would need to be approved by Congress.
The argument in favor of the tax credits? As so many are noting in these days of economic high anxiety, college education benefits not only the individual, but our nation as a whole. The U.S. faces increasing worldwide competition and that competition is increasingly over knowledge and ideas – the stuff of education, which would be encouraged by easing the cost of college. Of course this argument conveniently matches my own economic self-interest.
On the other side? I haven’t read specific arguments against the education tax credits yet, but I imagine the same arguments against the overall Obama budget might might apply – they will be expensive and help run up deficits in the trillions over the next 10 years.
Of course those deficits come on top of all the other red ink this country has been running up and committing to in recent years- such as the long-term cost of the war in Iraq and the various bank and auto industry bailouts. Together those figures have been reported to add up into the trillions.
So maybe the issue comes down to this: What should we be spending our money on? What do you think? Please let us know.
This entry was posted
on Friday, February 27th, 2009 at 7:07 pm by Len Maniace.
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Most of these aid programs rely on the ‘static model’ theory, that the aid itself won’t result in any change in behavior by the suppliers of the education.
But as we’ve increased aid, loan availability, and other financing sources for college, tuitions have inexorably risen, at 3x the rate of inflation over the past 20 years.
I can only conclude that colleges have raised their tuitions because they can. The money is out there, so why not? If they can charge obscene prices and still fill the seats, then why not?
Looked at that way, none of these schemes really offer much help, forgetting about how all this spending is going to bankrupt the country. It’s simply breathtaking in its recklessness.
I don’t think extra college aid will really help to make college more affordable on a macro scale, any more than too-loose mortgage lending standards made housing more available on a sustainable basis. It simply led to a bubble of highly inflated prices that has crashed, and hurt the people it was supposed to help. That’s what most government spending programs do too.
I’ll also add that all this inflated spending is mortgaging our children’s future. If we stay on this path, we’ll end up like Argentina during the Peron years. What a sad outcome for a great country. The level of irresponsibility we see in government today is simply breathtaking.
Interesting comments. I guess college prices might rise to the extent that the new tax credits stimulates demand for a college education. But then again colleges are in competition so that could deflect some of the increase by expanding supply – the number of seats.
It would be interesting to know what happened to college tuition costs after World War II and Korean War veternas went to college in large numbers on a generous GI bill. That legislation is credited with producing a huge number of college graduates who went on to spur the nation’s economy for the next 40 years. I guess that’s part of the President’s reasoning for the college tax credits.
Thanks for writing David V.!!!