Reviews | It’s time for billionaires to pay what they can afford for college
The only reform that can fix this disparity is for universities to stop advertising a predefined upper limit for tuition fees. If a “no tuition limit” approach were implemented, it could mean that some families are paying millions in tuition per year or more. Under this approach, the wealthy would be required to disclose their income and wealth, which universities would use to determine how much they could reasonably afford to pay in tuition. The result would lead to better access and better prices for higher education, as well as a new impetus in the drive to reduce economic inequality.
Elite colleges could use the extra revenue generated from unlimited tuition to dramatically increase their class sizes, giving many more students the opportunity to study at their institution. Only a small portion of US schools both have blind needs—without considering an applicant’s ability to pay in admissions decisions—and offer full financial aid to students who are not dependent on loans (or large loans). The ability of this select group to commendably provide as much help as an admitted student needs depends on schools not expanding access to an elite education by dramatically increasing their class sizes. . As economist Danny Yagan suggests, « Free tuition only helps if you can get in. »
At 38 elite US colleges, more students attend the top 1% (about 1.4 million households with an average annual income of $1.7 million) than the bottom 60%. This indicates that a no-limit tuition model could create huge opportunities for the not-rich. Jeffrey Selingo notes that the three most prestigious Canadian universities – McGill University, the University of Toronto and the University of British Columbia – enroll approximately 150,000 undergraduate students combined. That’s about as many undergraduate students who collectively attend the 18 top-ranked US universities.
Non-elite universities could use the additional unlimited tuition funding to meet the financial needs of more undergraduate students. Given that more than 65% of students from families in the top 1% of income attend a non-elite school, the magnitude of the potential additional financial aid to be redistributed is considerable.
To conservatives, such cross-subsidies may seem anathema, although economic theory suggests that price discrimination – charging everyone as much as they are willing to pay – maximizes profits, which the conservatives stand for. The only difference for universities that practice price discrimination, compared to companies, is that their status as associations allows them to reduce educational inequalities instead of enriching shareholders.
This suggestion is less radical than it seems. In Finland, the price of a speeding ticket is determined as a percentage of one’s annual income to also encourage individuals not to speed. This led to at least one person being fined $103,000 for essentially going 45mph in a 30mph zone.
In the past, our society was less sensitive to the idea of asking everyone to contribute what they could. The United States is at historically high levels of inequality, but we balk at anything like half the US federal income tax rate of 91%. Philosopher Peter Singer rightly believes that if we save a drowning child next to us, we should give to the poor until our donations significantly affect our own important interests. However, in his book, The life you can save, he suggests that those earning more than $53 million a year can “afford” to give 50% to charity – even though the logic of his ethical argument suggests that the ultra-rich should give much more. Why do we ask less of the rich just because the calculation of what they could bring seems unreal? The idea of owning billions is equally abstract.
If Yale implemented unlimited tuition, some wealthy families might skip college for other excellent schools that didn’t take the same approach. Good. There’s likely an abundance of wealthy families with qualified kids willing to pay, as evidenced by the million-dollar bribes some families allegedly paid college coaches for help with admissions. .
If only a handful of elite schools implemented unlimited tuition and wealthy families decided not to pay $200,000, $2 million, or $20 million a year to send their child to Harvard. , would it bankrupt universities willing to lead on this issue? No. Harvard would probably get away with its $53.2 billion endowment. At today’s sticker price, $60,000 in lost Harvard tuition is as insignificant as it gets to the wealthy family.
Elite universities might be hesitant to adopt an open-ended tuition model for fear it will drive down donations. Yet, it is not clear that this would be the case. Many wealthy alumni generously donate to their alma mater, which should be celebrated. Yet many others do not. Unlimited tuition for their children will improve the current model of “wait and hope” donations that universities rely on, as their wealthier students will guarantee them larger sums.
Moving to a no-limit tuition model would also make the true cost of college more transparent. The existing system, which combines high tuition fees with steep discounts, is misunderstood by many who could benefit from it, discouraging them from applying. What does have an impact is the high sticker price, which is the number most frequently published by the media and college rankings – even though federally mandated net price calculators and other initiatives governmental offer a better representation of the cost.
With unlimited tuition, colleges would not have a single price to advertise. This would encourage universities to provide more meaningful cost data, such as the average amount paid by families for each decile of US household income. Such brackets would tell non-wealthy applicants how affordable college could be for them.
Some schools, like Ashland University and Converse College, have recently done the opposite. They have significantly lowered their sticker price, but this reduces the possible redistribution between students with and without resources. This low-tuition, low-discount model is used in many European countries, but it could actually widen income inequality, as most students who go to university in Europe come from economically more affluent families. , even if they are subsidized by all taxpayers.
Unlimited tuition fees could be implemented alongside other reforms. Recently debated plans for free tuition at public universities for all but the wealthiest may combine well with unlimited tuition for students from wealthy households.
Existing restrictions on tuition fees benefit the wealthy and discourage the non-wealthy from applying. Unlimited tuition would solve both, allowing universities to further instill the American ethos of equal opportunity. Such a plan doesn’t dunk the rich, it just asks them to step into the shoes of the 99% of society who pay as much as they can afford for college.