Let’s Privatize State Colleges

Richard Vedder:

Op-Ed. An estimated 14.67 million college students attend what we call “state universities.” Some of them are renowned highly selective research institutions like the University of California at Berkeley or the University of Michigan, while others are relatively obscure schools with an open admissions policy. But all receive some degree of subsidization from the state government where they are physically located.

Yet there are good arguments to make state universities independent private institutions, albeit ones that still indirectly receive some governmental support. Our so-called “private” schools already mostly are indirectly heavily dependent on the federal government for support via its financing student tuition and room and board charges, not to mention research support and favorable tax treatments. With a few exceptions like Hillsdale College, purely totally independent private institutions are extremely rare.

Let’s give money to needy and accomplished students, not to schools. Data collected by Harvard’s Raj Chetty and associates show that the family income of kids attending schools like the University of Virginia or the University of Michigan averages around $200,000 a year, with the median income also in the six digits. These schools are not places where poor but bright and ambitious kids heavily populate. People worried about income distribution and access to economic opportunity should be concerned that state government aid to colleges is, in fact, largely a middle and upper-class entitlement.

Why don’t we provide vouchers for college attendance like some states do for students going to K-12 schools? The aid could be more explicitly targeted to kids who are either relatively poor or who excel academically. For example, suppose Michigan gave vouchers for attendance by residents that vary in magnitude from $1,000 to $15,000, with extremely high-income applicants made ineligible for any assistance, while very low-income students could receive enough to cover most basic living costs (more than they get today)? Why don’t we further restrict assistance after the first year to students showing at least minimally acceptable academic performance, perhaps something like a “C” average (2.0 grade point average)? Why don’t we put a five-year limit on vouchers, reducing the phenomenon of students taking six years to get a degree?