Education is a good thing, right? And making stuff ‘free’ ought to be popular, right? So making community college ‘free’ should be both beneficial and popular? But nothing the government does is free. If something – schools, roads, whatever – is made free at the point of use, that simply means it is being paid for in some other way, and probably by some other person. It is a way of passing the bill from the people who use the service onto the people who don’t. That doesn’t, of necessity, make it bad, but in discussing the ‘free’ stuff that the president is offering around it is always worth remembering what the word means.
What is true is that you generally get more of what you subsidize and less of what you tax. So subsidizing the community college system should lead to its expansion. Is that good? Well, the first question is to ask “cui bono?” – who benefits? As in most government subsidy plans people who use the service benefit at the expense of people who don’t, but in this case there is a twist.
There are already grants – Pell grants from the federal government, plus numerous state and college level bursaries – that subsidize community college for the very poor. Most people with income under $24,000 would not expect to pay anything at present. There is no particular benefit to the poorest to seeing these grants expanded, indeed they may face greater competition for places. The benefit will therefore go to middle class and wealthy people.
But this new policy, much trumpeted in the State of the Union address to Congress, needs to be paid for, and the president has a specific tax proposal in mind to cover it. The popular 529 accounts, under which middle class people can save for college funds, are to be taxed. Such funds are not much use to families that cannot possibly afford college education without the grants and bursaries and are unnecessary for the very wealthy who can pay for college out of ordinary income or savings. The 529 account is, however, a boon to numerous middle class families on decent but not extravagant salaries who want to invest in the education of their children.
So, middle class people will pay for a benefit that will go to middle class and wealthy people. There have been worse government plans. At least the cost for this will not fall largely on the poor. But let us look at the changes in behavior which will follow the changes in financing.
Money saved in 529 accounts can be used for community college or for any other school, including Ivy League universities. With no ability to save in tax-free accounts and free access to community college, middle class people are much more likely to choose community college. Effectively, a subsidy that is presently available for any school will now be targeted towards community college. That will not help prospective students from poorer families for whom community college is presently the only option.
But if middle class families switch from universities to community college this will be great for wealthy families who don’t need the benefit of a 529 to save for school fees. Some middle class people will settle for a less demanding education, freeing up university places for the wealthy and squeezing poorer people out of post-high school education altogether.
Quentin Langley is a Senior Lecturer in Marketing at the University of Bedfordshire Business School as well as a freelance columnist published in the UK and all parts of the US. He blogs on social media and crisis communications at brandjacknews.com
Filed under: U.S. Politics
