EagleTribune.com, North Andover, MA


July 14, 2013

Column:This college tuition funding plan is flawed


But not so simple in reality. As a few spoilsports have pointed out, there are some gaping holes in the assumptions behind the plan.

First, it assumes that some graduates will make a lot of money, and that their payments will make up for the deficits created by those who don’t make much.

And that is where the perverse incentive aspect comes in. A highly motivated, highly intelligent college-bound student with prospects for a lucrative career won’t have much trouble doing the math. Option 1: Take out a $32,000 loan, pay it off over the next five to 10 years and be free of student debt. Option 2: Go to college for “free” and then, when you’re making $500,000 a year within a decade or less, send $15,000 a year to the state for another decade and a half, finally breaking free of your college costs when you’re about to turn 50. Let’s see – $32,000 vs. $210,000 or more. Not terribly difficult to figure out, even for a middle-schooler.

It’s a version of “adverse selection.” Those with limited financial prospects will flock to a program like this, while those with much better prospects – the ones who are needed the most to make it work – won’t. So what’s the state going to do – force everybody who wants to go to a public college to participate? That would be anti-choice, and we know all right-thinking people are pro-choice, aren’t they?

Second, it is hilarious to hear government types backing a plan that would require an equal percentage of gross income from everybody, rich to poor. Gee, it sounds a lot like a flat tax. And you don’t need me to remind you of the politically correct view of that.

Sure, with a 15 percent flat tax, a millionaire would pay $150,000 and somebody making $30,000 would pay just $4,500. But you would hear the screams from sea to shining sea that the millionaire still wasn’t paying his or her “fair share.” You hear them even though the rich pay a much higher percentage of their income in taxes than the poor.

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