Executive Implementation Team Owns BPI Program
In any Organization, the BPI initiative to be a success would need to be first understood and owned as well as sponsored by the leadership. The leadership here includes mainly the business unit leaders who become the main sponsors of the BPI program. It is important for the Leaders to understand why BPI is required […]
Formulating Information Security and Data Protection Policies When Firms Go Digital
The Paradigm Shift Needed as the World Transitions from Analogue to Digital Information Security and Data Protection are central to any organization’s tech policies and more so, when Digitalization happens, as then the whole organizational processes and methodologies are entirely virtual making them more vulnerable to Data Theft. Indeed, having effective Information Security and Data […]
Investing in Sin Industries: Are They Worth the Hassle ?
Some professions in the world are not considered to be as acceptable as others. This notion of acceptability is widely influenced by the cultural norms in the society where one is conducting business. However, in the modern world, being associated with sin does not seem to be much of a deterrent to investors. Cities like […]
Developing the Predictive Equation
Once the Scatter plot has been used to find out the correlation between the inputs being measured as well as the desired outputs, it is now time to come up with an equation which shows the precise relationship. This is called Regression. Regression is a technique which summarizes the relationships observed in the Scatter plot […]
Disaster Recovery and Crisis Management
When we talk about Disaster Recovery and Business Continuity plan for any business or organization, we need to necessarily plan for Crisis management too. Though the objectives of all these plans might vary, they are all interlinked, interdependent and mutually inclusive. In large scale business organizations as well as high technology organizations with large operations, […]
The Green New Deal proposal announced by Alexandria Ocasio-Cortez suddenly became a talking point in American politics. The United States was visibly split into two camps, one was of people who are supporting the socialistic ideas being purported by the Democrat leader whereas others who oppose her plan.
In a rather surprising development, large swathes of young people seem to be highly impressed by Ocasio-Cortez’s proposal. Experts are of the opinion that this change of opinion is because a large number of American students face crippling student loan debt. Politicians have now become aware of the fact that if they were to somehow waive off the student loan debt, young people would vote for them in large numbers.
This is the reason why major politicians have now made student loans a central issue in their campaigns. For instance, Senator Bernie Sanders proposed a mega $75 billion per annum plan to fund the student loans. Hillary Clinton did not really have a position on this subject. However, she too decided to follow Bernie Sanders’ plan. The Democrats are well aware that “free college tuition” is an emotional subject which could get them back into the White House even though it does not make much financial sense.
In this article, we will have a closer look at some of the problems that may arise if free tuition is implemented.
Firstly, it needs to be understood that tuition expenses are a very small proportion of the overall college expenses. Boarding, lodging and such other personal expenses form the bulk of any student’s debt. However, providing free boarding and lodging is not included in government schemes. Hence, it would be incorrect to say that if “free college tuition” is implemented, it would solve the student loan crisis.
The reality is that the student loan crisis is not really related to tuition expenses only. Instead, of subsidizing the entire program, the government must limit the amount of money that students can borrow for a particular course. This limit needs to be linked to their course fee. At the present moment, students keep borrowing and end up with gigantic amounts of debt by the time they graduate.
Plans suggested by most politicians suggest that the tuition fee should be waived off at community colleges. However, doing so would further jeopardize an already bad situation. This is because as per the latest data, less than 27% of the students that enrol in a community college actually graduate. This is after the fact that they have invested their own money, i.e. have their own skin in the game. If there was no monetary downside to dropping out of college, more number of students would do so, and this would exacerbate an already bad situation.
The bigger problem is that many of these dropouts also end up having significant student loans even if they have not acquired any skills in college. Many times, they are simply not able to make the payments on these loans, and their burden also ends up falling on the taxpayer.
A major problem with funding community college is the fact that the government would end up funding the most mediocre students. It is a known fact that students who are truly gifted or brilliant prefer to go to a regular four-year college course. It is the mediocre students that select community colleges. In the long run, this may turn out to be a money-losing proposition for the government. This is because the government may have to spend more upfront than they ever hope to recover from these students via tax revenues.
The problem with a free college education would be that it would also lead to a lower number of admissions in private colleges. It is estimated that about 10% of the seats in private colleges will not be filled because of this program.
For an average college, this means that the expenses will grow by over $10 million for every five year period. The institutes will be forced to raise the fees in order to make up for the lost revenue. Hence, free tuition in community colleges will actually be paid for by raising tuition prices in private colleges. The bottom line is that the best and brightest would have to pay more money to learn whereas the state will pay the bill for mediocre students who are statistically unlikely to graduate.
Lastly, Bernie Sanders, Alexandria Ocasio-Cortez or any other politician ultimately plans to fund this free tuition by increasing taxes on the rich. This causes mass migration and leaves states worse off.
It is a known fact that nine states with lower tax rates have been outperforming the other forty one who have higher tax rates. Flight of corporations and jobs from the state makes it further difficult to implement free tuition since the state’s revenue streams also decline drastically.
The bottom line is that free college tuition is not really a proposal which has strong economic backing. Instead, it is being used by politicians to garner more votes. If implemented, this so-called “solution” may prove to be very expensive and may end up exacerbating the very problem it was meant to solve.
Your email address will not be published. Required fields are marked *
What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
