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Mohammed Alqallaf

ENGL 102

Dr. Cortney Barko

Essay 4

April 14th, 2016

Should College Education Be Free or with Minimal Cost?

The rationale for a government subsidy for college education has elicited arguments among numerous parties. Economists normally employ an input, output approach in providing their analysis; politicians are more concerned with voters’ interests and individuals are interested in satisfying their own needs. To cater for various parties’ interests, stakeholders should try and develop sensible decisions from an economic point of view. Economics deals with production, consumption as well as the distribution of goods and services. The underlying objective for subsidizing higher education is the notion of investing in human capital. Besides, subsidizing higher education is also influenced by the equity principle. It allows low-income students to carry on with their college education despite financial challenges. Whether it is feasible from an economic point of view largely depends on cost-benefit (Amy 15).

I propose that the government should subsidize college education due to its positive impact on the community, its ability increase work specialization and attaining equality. As a college student, I am interested in this topic and I believe that it is a matter of concern to many university students across the globe. Insufficient government subsidy toward higher education represents a stumbling block in acquiring affordable education to both continuing and prospective students.

I believe that the government should subsidize college education to help attain equity as well as opportunity in the society. I suppose that the education system should be fair for all so as to identify the capabilities of able students regardless of their economic background. If indeed it is believed that every intellectually capable student should continue with his or her education, then subsidy has to be provided. Higher education, without any doubt, is expensive, and if users are left to pay each and every cost, it would put a huge burden on low-income earners. Surely, it would be difficult for these families to support even a single member of the family to acquire higher education in the absence of the subsidy. Moreover, the young generation would be pushed into the labor market with insufficient training skills or qualifications. In this regard, the government should provide financial assistance to higher education in order to provide the less fortunate with opportunities. The young generation from low-income earners can eventually get the opportunities to acquire higher education. Consequently, this is another way of minimizing intergenerational poverty since the youth will be well equipped for employment and gain self-confidence prior to their entry in the labor market. Thus, higher education should be subsidized to attain the principle of higher education

Education is a social as well as a human capital investment. I am of the view that education serves two fundamental purposes. First, it builds human capital as it provides necessary skills that directly contribute toward productivity. Secondly, education improves people’s incomes and lives, thereby, leading to a reduction in crime rates. In so saying, the society would surely become stable. Education and training enhance an individual’s knowledge and skills, which primarily constitute human capital. So, it is through skills developed through education that a person can become productive and all factors remaining constant higher earnings. It is true that all governments consider human capital valuable and that is why some governments emphasize the need for human capital to spur economic growth. Human capital competencies are valuable components in a knowledge-based economy and as such highly skilled workers are significant requirements of the knowledge economy. Education is, therefore, important for a country’s prosperity. In this respect, governments must thoroughly analyze the market and take responsibility for forecasting manpower requirement in order to adequately plan for the labor supply.

In my opinion, education is an important human want that can help individuals to attain self-actualization, and if everyone aspires towards attaining self-actualization, then the government should encourage people to do so. The government then should operate in with financial sustainability to avoid any deficits and achieve profits. To achieve these profits it should invest in the education sector. With the rising level of the knowledge economy, the government should look into ways of how it can cope up with this essential type of economy. This requires investment in the human capital even in the economic rise as well as downturns. To do so, it must provide a competitive education as well as training. Primary and secondary educations are short-term investments that respond to communities’ immediate wants. Investing in higher education presents a lot of economic and social benefits to the society. So for a country to realize sustainable long-term objectives, the government should provide financial assistance such as subsidies to higher institutions of learning. It must do so after careful planning as well as through analysis of educational needs. Planning will help in making accurate forecasts concerning labor force.

I posit that the government should as a financier indirectly use taxpayers’ money to fund education in the country. Funding higher education institutions enhance the political goodwill as well as academic development required for the well-being of the society. The principles of accessibility as well as inclusiveness demand for equal opportunity for all in a country’s public education. This commitment establishes an avenue where there are numerous shared experiences as well as undertakings. The government should then serve as a financier by providing financial aid to the qualified individual who some unavoidable circumstances cannot fully undertake their education. The government can provide these subsidies in two methods: institutional based and individual based. Institutional based should be a grant provided to institutions for research work, teaching activities and specific funding programs. Individual-based subsidies are student grants as well as loan schemes that students can acquire to pay for their tuition fees.

Despite some contradicting evidence, there is a strong indication that higher education subsidy is beneficial for college educated employees to earn more compared to the less educated ones. The connection between the choice of education and the determination of wages signify attainment of efficiency as well as equity unless there are some borrowing hindrances. I believe that real externalities indicate efficient subsidy to be positive and it also maximizes the unskilled workers’ net incomes.

Subsidies significantly contribute to higher profitability in the education industry, thus transferring wealth from the public to the education industry. Higher education, more so the undergraduate education provides a lot of profits to nonprofit making colleges and universities. They may not report such profits in their financial statements, but rather use their profits in research activities, providing low demand courses and faculty teaching materials, featherbedding as well as excess compensation. These profits emanate from students and the public (Fried 2). Fried further points out that the governments should enact policies that enhance competition between for-profit and nonprofit institutions to help in reducing the cost of education. Moreover, the government should reform accreditation process so that qualified institutions can enter the industry. Subsidies and other deductions should be abolished so as to ensure that qualified students graduating from colleges not overburdened with debts. This is because the government should ensure that each and every deserving student has access to college and university education, instead of attaining high-profit levels (Fried 10).

In as much as higher education subsidies aid in promoting college enrollment, it limits, however, students’ efforts in choosing their academic choices. Normally, parents are more likely to portray lower expectations concerning their children’s academic prowess when education costs are low. Moreover, they might just send their children to universities even if the student does not expect higher benefits of attaining a college education. Furthermore, parents may continually pay their children’s university education no matter their educational outcome could be. Thus, higher education subsidy has disincentive implications that adversely interfere with the accumulation of human capital (Sahin 1).

Subsidies lead to three fundamental problems: they do not target the intended recipients since they only benefit high individuals in their mid-career; they are also expensive; and given that they are expensive, treasury normally rations them. Therefore, subsidies cause unnecessary harm to people instead of helping them. For, example, loans are very small, causing a lot of poverty among students and encourage the enormous use of credit cards (Barr 1). The government should, therefore, abolish interest subsidies by introducing flexible fees, accommodating loan system and increase accessibility to solve education funding challenges. Barr suggests that flexible fees will reflect the diversity to mitigate quality reduction. To achieve accommodating loan system, the government should provide adequate loans to cover the cost of living as well as tuition, make higher education free to address poverty levels among students and free them from highest interest borrowings including credit card debts and bank overdrafts. Finally, to achieve accessibility, the government should provide scholarships as well as grants to students and provide students from poor backgrounds with more academic support as well as personal requirements (Barr 1).

There is no doubt that the government should enhance social security as well as public order. Moreover, it should maintain and direct citizens’ normal way of life. It means that the government should facilitate community development and welfare. In so doing, it has to manage its resources efficiently and fairly allocate such resources. The government is similarly perceived as the main provider of basic education and as a provider, it should provide the required services. Nonetheless, provision of higher education services falls within academic institutions which undertake the responsibility of teaching as well as research. According to Amy, the government’s role as the financier and regulator of these services in higher education is highly desirable. As a financier, it has to offer various levels of mechanisms such as a provision of grants to higher education institutions as well as loans and grants for students (Amy 16).

It is common knowledge that governments bear the responsibility of providing their citizens with goods and services. Education is widely acknowledged as not only a human right but also a public good. Thus, the government as a provider of education should subsidize higher education. Amy, in her support, points out that government should subsidize higher education by making it affordable for all and help in attaining national values. They should not consider higher education as a personal investment, but rather subsidize it put in place minimum controls (Amy 16).

Relying on the private sector to provide higher education as proposed by Sahin (Sahin 1) may introduce particular threats to education quality. Even though high school leavers may prefer private institutions of higher learning, (Amy 18) they can threaten the quality of education in the sense that low-income earners will not acquire higher education thereby leading to the production of under-skilled labor. Moreover, there is no assurance that private institutions would provide quality training because they are more concerned with profit maximization. In their support (Mitchell, Palacios & Leachman 2) observe that cutting higher education subsidies can diminish the quality as well as access to education. For example, in the United States several states have cut their spending on higher education which has led colleges and universities to increase tuition fees to compensate revenue losses. These institutions have also reduced their faculty numbers, minimized their course offerings, closed some campuses, shut their computer laboratories, decreased library services and a host of other cost measures to remain sustainable. Many jobs in the future would demand college educated workforce and as such it is important for states to provide funding to higher education for affordability and quality purposes. They must also provide qualified students with financial aid in order to build skilled as well as diverse employees required for the jobs (Mitchell, Palacios & Leachman 2).

Generally, college degree presents good returns to learners. While the benefits may not be uniform across occupations as well as college programs, there is a consensus that college graduates earn better salaries across all occupations. This, according to many researchers is caused by the fact that there is high demand for employees with cognitive analytical skills that cannot be easily automated. Despite these returns after completing university education, the overall rate of completing higher education has stagnated and the ones finishing take much longer than it was in the past. This is due to financial challenges faced by students from low-income families and the decline in financial assistance for students (Oreopoulos & Petronijevic 33). Goldrick-Rab and Andrew posit that many students perform poorly if they cannot afford supplies, transportation costs as well as cater for their cost of living. This is because when a student works extra hard his or her education suffers. They can opt to borrow, but is risky to acquire debt for community college education because of low rates of education completion (Goldrick-Rab and Andrew 7). It is in this regard that the government should put in place effective policies such as a provision of higher education subsidies to help in lowering earning inequalities in the among citizens.

Unlike public institutions, for-profit colleges do not receive government subsidies hence, they charge higher tuition charges to cater for the cost of providing education. With the high level of tuition cost, students resort to financial assistance such as loans to fund their college education. Even though student loans play an important role in paying a student’s fee, students must repay such loans and, therefore, many tend to shy away from them. This may affect student enrollment at colleges and completion of their programs (Cellini 529). Consequently, it is assumed that the government should fund higher education to make it affordable. This will result in a higher enrollment among the poor and help in reducing the gap between the rich and the poor (Goldrick-Rab, Sara, & Andrew 5). Earlier this year, President Obama proposed the need for communities to provide free tuition fees. This move of reducing college fee education has elicited various presidential candidates in 2016 to similarly propose for free college education ((Goldrick-Rab, Sara, & Andrew 5). This is to ensure equity in higher education and lowering the gap between the rich and the poor.

As stated earlier, education is a public good that the government must intervene in its provision by providing funding. However, according to Fried, a free market provides the greatest prosperity. A free market in education industry would lead to efficient allocation of resources (Fried 13). Johnson criticizes government subsidy for the provision of low-quality education since they do not provide intrinsic value due to lack of competition (Johnson 17). However, the government regulates and monitors higher education quality in the country. As a regulator, the government can provide college funding to improve the quality of education (Amy 19).

Overall, Institutions of higher education play the fundamental role in enhancing knowledge driven economies around the globe. They can help in improving local regimes by training the competent, reliable and responsible workforce. Moreover, there is a belief that the society can achieve public order. It is, therefore, essential for the government to provide higher education subsidy to attain a quality education and realize economic growth. Moreover, the government can through subsidies uphold the equity principle and allow all qualified citizens attain higher education.

Works Cited

Amy, Chan Shing Yin. "The rationale for subsidy of higher education in Hong Kong: A sensible decision from an economic viewpoint." International Education Studies 3.4 (2010): 15.

Barr, N. (2002). Funding Higher Education: Policies for Access and Quality', House of Commons, Education and Skills Committee. Post-16 Student Support, 2001-2002.

Cellini, Stephanie Riegg. "Financial aid and for‐profit colleges: Does aid encourage entry?." Journal of Policy Analysis and Management 29.3 (2010): 526-552. Print

Fried, Vance H. "Federal higher education policy and the profitable nonprofits." Cato Institute Policy Analysis 678 (2011).

Goldrick-Rab, Sara, and Andrew P. Kelly. "Should Community College Be Free? Education Next Talks with Sara Goldrick-Rab and Andrew P. Kelly."Education Next 16.1 (2016).

Johnson, William R. “Equity vs. efficiency in subsidies to higher education.” University of Virginia (2010). Print

Mitchell, Michael, Vincent Palacios, and Michael Leachman. "States are still funding higher education below pre-recession levels." Center on Budget and Policy Priorities (2014).

Monaghan, David, and Sara Goldrick-Rab. "Is Community College Already Free?" (2016). This source explains whether community colleges are free.

Oreopoulos, Philip, and Uros Petronijevic.Making college worth it: A review of research on the returns to higher education.No. w19053.National Bureau of Economic Research, 2013.

Sahin, Aysegul. "The incentive effects of higher education subsidies on student effort." Federal Research Bank of New York Staff Report 192 (2004).