Rich People and Education

Despite the fact that the price of public colleges has skyrocketed in the last two decades, and some argue that America’s state schools have forgotten their missions, David Leonhardt over at the New York Times wonders if maybe America’s state universities are too cheap. They aren’t.

As he writes:

Gary Becker, the Nobel laureate economist, and Richard Posner, the federal judge and author, argued on their shared blog last week that tuition should increase. They said it was too low at many public colleges. I imagine many readers will find this argument ludicrous, at least initially, but it’s worth considering.

As Mr. Becker writes, average tuition for in-state students at public colleges is $7,500 a year. For many families with students at flagship state universities, $7,500 is not all that much money. At the University of Virginia, to take an extreme example, only 8 percent of undergraduates receive Pell Grants, according to U.S. News, which means that only about 8 percent of undergraduates are in the lower half of the income distribution. In the freshman class at the University of Michigan several years ago, more students had parents making at least $200,000 a year than had parents making less than the national median of about $53,000.

This piece makes use of a common (rather questionable) line of thinking among academic administrators at both public and private colleges: The school has a lot of students from rich families. We should therefore charge high tuition, because the rich people can afford it. But don’t worry; we also have some nice scholarships for the poors. Everyone comes out on top.

Not really. The problem is that this line of thinking treats public universities and their distributions of rich and poor students as essentially appropriate. In fact, there are too many rich students in public colleges—or too few poor ones. This is a problem American public colleges should be working to correct, not trying to exploit.

So only 8 percent of undergraduates at the University of Virginia receive Pell Grants, the federal education money available to students from low-income families. This does not mean UVA should be more expensive. It means there should be more students there who receive Pell Grants. The reason that currently only 8 percent of UVA students get Pell Grants is because in-state tuition at Virginia’s flagship public university is $10,836. The total cost of UVA, in fact, is about $22,543 a year. The maximum Pell Grant for 2010-11 is $5,550.

People who receive Pell Grants can’t afford to go to UVA. That’s tragic. It’s not an opportunity for UVA to make some more easy money.

A public university should be the state’s cheap school. That’s why it’s there.

If some, or even many affluent students attend public universities that doesn’t indicate that the school should be more expensive; that means it should be less expensive so more poor students will go there. The state universities exist for the state’s middle and working classes. If some rich people go there, well great. They’re getting a bargain. But bargains aren’t just for rich people.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer