Jan 12th, 2009 at 12:15 pm
Third Way: Let’s Stimuluate The Economy Through Permanent Tax Cuts!
The appeal of a permament, non-refundable college tuition tax credit in particular somewhat escapes me. Why design a tuition assistance program in such a way as to exclude those who are in the most need? Meanwhile, given the rate at which college costs have been rising, there’s ultimately going to be no way to make things affordable without policies that are actually aimed at cost containment rather than having the federal government try to patch the gaps (except for poor people, who get nothing).
Nothing wrong with tuition assistance, of course, but if you’re really concerned about tackling the higher education affordability issue that’s where all the action is.
34 Responses to “Third Way: Let’s Stimuluate The Economy Through Permanent Tax Cuts!”
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January 12th, 2009 at 12:21 pm
Wait, they made it non-refundable?
That is the feces of a very cowardly male bovine who moves in small steps.
January 12th, 2009 at 12:24 pm
The Third Way convinces me more than ever that they are a Corporatist attempt to takeover the Democratic Party. What else is the stuff MY quotes supposed to prove? I hope Larry Kudlow sues them for stealing his material.
January 12th, 2009 at 12:25 pm
Too many people go to college anyway. We don’t need to encourage more people to go to college; we need to beef up our vocational training programs for teens.
Government subsidy of higher education helps drive up the cost of college and is somewhat parallel to government subsidy of home-ownership. Politicians used to sprout off about how everyone should own a house. We now see what bad policy that was. While I[d rather spend tax money on education than mortgage subsidies, it’s not clear that we’re getting much bang for the buck by having such a large percentage of the population go to college.
January 12th, 2009 at 12:28 pm
Why do I think our major universities will shortly announce a tuition hike exactly equal to the tax credit — and that the money will flow into their tax-free endowment funds?
January 12th, 2009 at 12:32 pm
Exactly how much of a tax credit is ThirdWay talking about here? Because in case they haven’t noticed, college tuition costs are insane and knocking a few K off the total is not really going to make much difference for most students. I mean, great—your monthly student-loan payment goes down by ten bucks. Whoop-de-doo.
Also, what does “non-refundable” mean in this context? I couldn’t figure it out. Please advise.
January 12th, 2009 at 12:38 pm
Unfortunately, I agree with Mr. Williams above. Transferring an ever-increasing burden from the states to the federal government does nothing to contain the cost of higher education. Tuition deductions and credits don’t work! In states such as Wisconsin, the UW system is supported by a decreasing share of taxpayer support while tuition has increased. There are philosophical arguments one can make pro and con, but the fact remains.
PS: As a college student in the lowest income tax bracket, I’ve never had a federal income tax burden. The tuition deduction and Hope credit are literally worthless to me even though I pay the same in-state tuition as everyone else in Wisconsin.
January 12th, 2009 at 12:46 pm
Ah, I see that Third Way refutes my suggestion that their Tax Credit will be scooped up by colleges via tuition hikes:
” This is the reason conservatives cite for wanting to cut college aid. They can’t be more wrong. The greatest college aid program in US history—the GI Bill—had no impact on tuition prices.18 Moreover, college tuition rates have far outpaced
increases in federal student loan funding.”
———-
So Third Way is saying that the Universities will fuck us no matter what we do so we might as well do what Third Way suggests.
I assume that this agile sophistry illustrates how the nation benefits from subsidizing college education.
January 12th, 2009 at 12:56 pm
No one goes to college anymore. It’s too expensive.
January 12th, 2009 at 1:09 pm
It would make more sense to let people take a tax cut on their future earnings to pay their tuition. After all, you would hope that someone would make more money post college with a degree then without.
January 12th, 2009 at 1:19 pm
I hereby retract this post, on behalf of CAP and CAPAF.
DO YOU HEAR THAT, PEOPLE? THIRD WAY IS RIGHT TO ADVOCATE PERMANENT TAX CUTS FOR THE WEALTHY AND CALL IT A BOLD NEW IDEA. IGNORE MATTHEW YGLESIAS!
And to the fine Broderite men and women of Third Way, I offer my deepest apologies for the churlish criticism inflicted on you by this rogue blogger we have shamefully chosen to employ.
January 12th, 2009 at 1:22 pm
College isn’t for everyone. In fact it isn’t for most people. I don’t think the government should do anything more to make college more affordable. There should be more and better non-college jobs instead.
January 12th, 2009 at 1:23 pm
Oh God, Third Way, how we have offended thee!!
I am so, SO sorry we ever hired Yglesias.
Just say the word and we send him packing. I mean it, Third Way — just… just say the word.
Even ten seconds’ worth of partnering with a fine, fine organization like yours is worth a thousand, a million Matthew Yglesiases!!
January 12th, 2009 at 1:29 pm
Because the people who are “most in need” don’t attend our cocktail parties, don’t you know? [said in Thurston Howell voice]
January 12th, 2009 at 1:34 pm
There are arguments here that many people who go to college shouldn’t. That may be true. But a far bigger problem is that many who should go to college, can’t.
January 12th, 2009 at 1:35 pm
Look at the title to this post. Look at it.
January 12th, 2009 at 1:50 pm
http://en.wikipedia.org/wiki/Bystander_problem
January 12th, 2009 at 2:03 pm
Community colleges and business colleges are not “losing” students to four year Universities … if anything, encouraging too many students to attend four year Universities feeds us with more students.
However, for everyone who has been talking on the basis of ignorance in this comment thread … because of the way the current Federal aid system is set up, a large number of programs at community colleges and business colleges are already set up as Associate of Arts degrees and accredited to qualify for the system of federal tuition support.
Indeed, while the Reagan Years have been a massive game of public finance musical chairs, with the federal government dumping responsibilities on state, who respond by cutting funding of universities, who respond by raising tuition, with their parents clamoring for more Federal assistance …
… the side effect of the shift from direct state support for universities to indirect Federal tuition assistance has been an increase in support for two year post-secondary institutions providing a strongly vocational oriented education.
January 12th, 2009 at 2:25 pm
At least in Florida, state policies regarding tuition and fees at public colleges are specifically designed to exclude those who are in the most need. Legislators and college administrators here have been telling us for decades how systematically raising college costs at a rate two or three times higher than general inflation, thus gradually pricing the state colleges out of reach to the working class, somehow “improves the standards” of the state university system. This makes no sense at all, is completely backwards in fact, unless by “raising standards” they mean “chasing out the hoi-polloi.”
Al: Of course there’s something wrong with tuition assistance, if you think that “the rate at which college costs have been rising” is a problem. Increases in tuition assistance cause increases in college costs!
Not at state colleges, obviously, where tuition and fees are determined by legislation rather than by “market forces,” i.e. the pursuit of higher rates of profit.
January 12th, 2009 at 2:51 pm
“Not at state colleges, obviously, where tuition and fees are determined by legislation rather than by “market forces,” i.e. the pursuit of higher rates of profit.”
Eh, not really. The higher private college tuitions go up, the higher state college tuitions can go up and still be a ‘bargain’ compared to the private schools. The states know this and have been raising tuitions accordingly.
January 12th, 2009 at 3:07 pm
Cost containment? Build more universities/expand existing universities.
If there are 75,000 students who are qualified to attend and want to attend the University of Illinois at any given time, then there should be 75,000 available slots.
Cost containment needs to accompany an increase in need-based financial aid, and a refundable tax credit is NOT need based. It’s quite the opposite, really. The least needy students derive the the most benefit. The neediest (would-be) students get nothing.
Double, heck, triple the Pell grant. Expand the pool of subsidized (for low income) and unsubsidized (for middle class students who still need help) federal loans to ensure that anyone who wants to go to college can go.
College is expensive. We need to have need-based financial aid to allow students to attend. And, the government needs to ensure that the students with the most need get plenty of financial aid to ensure they aren’t declaring bankruptcy upon graduation.
January 12th, 2009 at 3:10 pm
The number of college seats hasn’t kept pace with the growth in population, even if we limit the potential customers to haoles, asians, and the upper income brackets of other groups.
As demand continues to outpace supply, Federal assistance dollars are immediately sopped up by higher prices.
MY has noted that the process of a college education hasn’t seen the sort of productivity improvements found in other industries. While there are some low hanging fruit in improved productivity, ultimately, a university education is a social activity which doesn’t lend itself to the what’s worked for so many other economic activities.
The main goal of productivity increases is to reduce how many dollars (including how much training) it takes for me to provide you with an economic good. This can include: reduce my pay; reduce my hours, either directly or via automation; lower the barriers to qualify for my job; reduce the amount of two-way interaction.
I believe MY was thinking of lecture halls when he imagined that we might as well sit students in front of a computer to absorb the information. To a degree, he’s right. Hell, you can IM to handle a bit of freshman/lecturer interaction.
But, as many of you may recall, once you get much beyond Whatever 101, even at an ITT, there’s still a need for social interaction. And, as long as we expect some level of expertise from the seminar/lab/classroom lead, there’s only so much blood you can squeeze from the process.
Therefore, I posit that in our current environment, the cost of a college education will rise more quickly than other endeavors, because it’s difficult to reduce headcount relative to the size of the classes.
January 12th, 2009 at 3:43 pm
I’d like to see some better research on the real cost of higher education for the typical student.
(1) The inflation rate is an average. Half of all goods therefore must have cost increases greater than average.
(2) Baumol’s Disease means that labor-intensive non-tradable industries like higher ed (and retail & medicine) will always lag behind those industries that can benefit from automation (or cheap imports). This is why those things typically have “above average” inflation.
(3) Higher quoted tuition prices doesn’t necessarily mean that the typical student pays much more. A large chunk of all tuition increases goes to more financial aid. The end result is that the wealthier pay more and the less wealthy do not. This is the kind of redistribution progressives favor when it comes to tax policy.
January 12th, 2009 at 5:04 pm
Matt, you talk about reducing costs in higher ed all the time, what do you recommend? In public higher ed, where I work, so much funding is locked into particular projects, and so much time is wasted pursuing grants, that I’m constantly surprised that anything gets accomplished. It’s so easy (relatively speaking) to get money for capital spending–new equipment, infrastructure, new buildings–but next to impossible to get money to maintain anything or pay people to take care of all the fancy stuff we buy. Add to that our constant reductions in support from the state, ever-increasing state and federal regulation, and the cliche skyrocketing health care costs, and I feel like college is incredibly cheap.
January 12th, 2009 at 5:17 pm
I think a greater concern should be cost restraint at private colleges. My parents are paying a tremendous toll and working very hard for my college education.
State colleges, with their puny tuitions, is hardly a real middle-class issue and I don’t see how they matter that much. Sure some really poor people who are too dumb or lazy to qualify for financial aid either public or among elite private colleges (which are exceedingly generous) are being shut out, but in the greater scheme of things there is no absolute equality and there is an economic argument against absolute equality of opportunity in any case. As long as a good number of sufficiently intelligent and qualified people manage to get a college education I don’t see how it matters whether those people were poor or moderate-income or wealthy, especially as there are throngs of middle-class kids who are more than qualified for a decent college education.
I mean, if you are poor and you are dumb (both criteria which one has to satisfy to not be able to obtain a college education) I don’t see what the gov’t could do to save you.
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