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Indentured Servitude for Students?

The New York Times—the most valuable real estate in journalism—devotes its op-ed space today to an argument by University of Chicago professor Luigi Zingales to “eliminate government subsidies” of college students (by which he apparently means all Pell Grants and federal student loans). He would replace this system with one in which venture capitalists invest in promising students and in return, receive “a fraction of a student’s future income,” or, better yet, “a fraction of the increase in her income that derives from college attendance.”

This proposal is worth discussing not because there is much danger that it will literally come to pass but because it shines sunlight on the mind-set of many conservatives, exposing a way of thinking that does in fact result in many policy decisions that are hurting American higher education.

There are lots of problems with Zingales’s proposal, but the most important one is that it conceptualizes higher education as an almost purely private good. His new system, he says “would make only the beneficiaries of a college education—not all taxpayers—pay for the costs of it.”

But of course the reason that American taxpayers have long subsidized college attendance as well as K-12 education, is that we are all “beneficiaries” to some extent when other members of society are better educated. Elderly people, who don’t have kids in public schools or in public universities, nevertheless benefit from the scientific and literary advances made possible by the education of others. As Claudia Goldin and Lawrence Katz have so persuasively documented in The Race Between Education and Technology, we all benefit when America invests in education and make the U.S. able to compete internationally and raise the standard of living in this country. And we all benefit when education helps democratic citizens better evaluate debates and arguments under our system of self-governance.

In the past, even those who would privatize our public elementary and secondary schools with vouchers, such as the late University of Chicago economist Milton Friedman, wanted vouchers funded with public dollars. Out-flanking even Friedman on the libertarian right, Zingales pushes Chicago thinking to a new extreme.

Under Zingales’s radical theory of private financing of higher education, it seems hard to see why public universities should exist at all. Under his way of thinking, why not end all taxpayer support for higher education, privatize public colleges, and have private investors make bets on the University of Virginia vs. William & Mary and let the market decide?

But if Zingales’s theory of education as a private good is extremist, it nevertheless seeps into the mind-set of state legislators, who, year after year, cut funding for public universities and place more of the burden on students. At the federal level, lack of focus on the public-good aspect of higher education has also led to a shift in aid that benefits low-income students (for whom support makes the difference in college attendance) to tax subsidies for fairly wealthy students (who would go to college anyway.) The public interest, after all, is in boosting the overall level of education in society, so the public rationale is most powerful when aid makes a difference in decisions to pursue further education.

So maybe The New York Times has done a service after all—not by giving space to a practical idea that will advance our country, but by airing some of the dangerous and wrong-headed thinking that underlies many of our problems in higher education today.

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