Governor Kitzhaber has decreed that by 2025, 40 percent of Oregonians should have earned at least a four-year college degree, 40 percent should have a two-year degree, and the remaining 20 percent should have a high school diploma or its equivalent.
Now, State Treasurer Ted Wheeler wants taxpayers to help pay the rising cost of those college degrees and offset the “soaring debt” students are incurring. His Opportunity Initiative would create a permanent fund to “….both increase student aid grants in the short-term, and also put Oregon on a path toward a long-term solution to the problem.”
Unfortunately, it likely will do just the opposite. Third-party funding from the state or federal government actually raises higher education costs as institutions increase tuitions to grab that extra cash.
That would be bad enough; but it will be even worse, because the Treasurer proposes to finance this cool new scholarship fund with $500 million in general obligation bonds in 2014 and smaller bond issues over the next thirty years. The revenue generated from the bond proceeds will be dedicated to student assistance, with the hope that in 30 years that revenue can cover the so-called “needs gap” for two years of post-secondary education for every Oregon student. Whether or not the investment assumptions of the proposal work out, taxpayers will be on the hook to repay the bonds plus interest long into the future.
Worse yet, there is even evidence that more government funding of higher education actually translates to slower state economic growth. That’s likely because individuals know their own needs better than politicians do, so leaving the money in private hands produces better economic results.
Academics such as Charles Murray, Richard Vedder, and Carl Bankstron go further, arguing that four-year degrees aren’t what they used to be and that state funding simply wastes precious financial and human resources.
Whatever the value of a college degree to an individual, it’s becoming clear that state funding of those degrees is likely to cost taxpayers more than they gain.
Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.