According to the Sunday Independent, the Minister has told them that fees may be returned by 2010:
link here
A few points that are worth making at this stage include (and i am working with limited time on a document that will put some figures on some of this).
- Are we talking about only the universities or is it proposed to bring fees or contribution for the Institutes of Technology also? If the latter, then this debate becomes very different. If just the universities, then are the IT's going to end being favoured by students over the universities? Has anyone thought about this and the potential positive and negative aspects?
- Does anyone actually know the income distribution of households who have a member in college? Within our discussion, we have made various guestimates but a hard number would help this discussion particularly if, as the Minister has said often, this is just going to be restricted to high income earners.
- Are there any problems with basing fees on parents income? Most students are over the age of 18. Should assessment not be on their own means?
- The only real international alternative that anyone has suggested is the income-contingent loan system so I am assuming that this is the main method being considered. The articles posted in the last week here outline the main issues with this system including the administrative and default costs and the extent to which the government subsidises the scheme
- Is anyone going to give a coherent defence of the current system? The main defenders today are still using the line that the free fees system is good from a distributional perspective which is plainly absurd. This does not mean that free fees do not have other arguments in their defence. For example, some of the following arguments could be examined. I am not advocating any of these and feel free to savage them but they are closer to logical arguments in favour of the status quo than the plainly wrong argument that free fees are a redistributive tool.
(a) Free fees are a subsidy to human capital investment which in general increases economic growth
(b) Free fees are a reward for effort. By removing this scheme and leaving expenditure constant we will be effectively shifting tax burden from those who take higher degrees to those who dont thus disincentivising effort.
(c) Free fees are a powerful behavioural signal removing the uncertainty surrounding educational investments. Though the US and Australian experiences dont bear this out strongly.
(d) Added to this, there is behavioural evidence that young people find it difficult to process debt and this made lead to overly present focused decisions in the face of uncertainty. Again, the fact that rates of participation did not go down in the UK points against the argument.
(e) While middle class parents benefit disproportionately, they also pay more tax. The students going to college will also pay more tax, on average. Thus the "middle class hand-out" argument is unfair.
Most of the points a to e are at best superficial or worse obvious nonsense.
ReplyDeletea) The growth comes because education increases one's income. So unless there are positive externalities (evidence for which is slim) there is no reason to subsidize.
b)The income that arises from the effort is a reward. Why does education need to be subsidised? See above.
c)You can also remove the uncertainty by committing to fees.
e) This is the most elementary fallacy - no one with any understanding of economics could possibly believe this.They pay more tax because they have more income - its nothing to do with education. People who make more money because of property investments also pay more tax but the state doesn't pay for those investments?
Take 2 people with the same income (& hence the same tax).One makes 100k because of his free university education, the other didn't go but worked extra hard instead. Why should the first get a subsidy to his investment and not the second?
There is no doubt - none whatsoever - that the evidence is scant at best on the positive externality (or social return) to higher education. Higher education might be a tool of policy (knowledge economy etc etc) so, as in the UK, providing for that from the taxpayer might be justified (although again little evidence for doing so as a policy). I do have to say that I have little understanding for the argument that somehow the 'middle class subsidy' is ok - ignoring all the trite stuff about bono and his taxes, higher income pay more taxes to redistribute. How that is done is a political and loaded decision - but that is why taxes are paid. Is there a private return (yes!). Is there a social return (no/inconclusive).
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