Arnold Kling  

Comment of the Week, 2003-09-17

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On the topic of college tuition, Andrew Martin writes,


I disagree with the idea that tuition is high because the government helps pay for it. UNC, for an instate student is much lower than that $20 grand for the precise reason that the state funds it. However, with the budget crunch and massive expansion plans due to higher enrollment as well as the much needed renovation of seriously outdated buildings, tuition will continue to rise. I don't see this trend being isolated to the UNC system. As mentioned above, most jobs that don't involve flipping burgers require a bachelor's degree...I think tuition is high mostly for the reason that demand is high. In many instances it is actually lower than it should be because of help from the state, not higher.

For an individual in-state student, a subsidy from the state lowers the tuition. However, the overall effect is to shift the demand curve for college to the right, which increases cost and raises tuition at the margin.

In theory, if college has a "public good" component, then subsidizing students to attend college makes economic sense. However, does it make sense for the state of North Carolina to subsidize North Carolinians to attend the University of North Carolina but not to attend Duke or Elon or some other college or university in the state? Why is the subsidy not in the form of a more portable voucher?


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COMMENTS (3 to date)
Craig Newmark writes:

". . . does it make sense for the state of North Carolina to subsidize North Carolinians to attend the University of North Carolina but not to attend Duke or Elon . . ."

Actually, North Carolinians do subsidize students to attend Duke. A little. North Carolina currently pays $1800/year toward the Duke tuition of NC residents. I assume--but have no first-hand knowledge--that this subsidy is also given to NC students attending other private colleges in the state.

Mats writes:

Andrew - "I think tuition is high mostly for the reason that demand is high." me - yes of course, demand is high relative to supply, that's a good thing. Let's hope supply increses in this sector!

John Thacker writes:

Craig is correct. Thanks in part to the influence of religiously minded members of the state Legislature wishing to support the small private religious colleges, North Carolina gives $1800/year to residents to attend any private university in the state as well.

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