higher education: a sensible proposal
The status quo
So, Obama wants to be the Education President. The public
education system is a disaster because politics have taken over.
University education is still the envy of the world but it is getting
unreasonably expensive. The only solution that anyone seems to be
considering is getting in debt, if you're unlucky enough not to have
rich parents. The latest proposal, that would force students to
start paying interest on the student loans while still in school (and
dealing with courses, exams and homework in addition to likely working
part-time already for day-to-day expenses) is nothing more than
corporate welfare of the worst kind. Why should financial
institutions profit from the least equipped to succeed, those without
It is unfortunate that the world as it is seems to be financially
backwards. When one is young, energetic, curious, creative,
motivated to learn and start businesses, is when financial backing
would be most helpful and could make the biggest difference yet is
unavailable. In old age, when most people have the means, after a
lifetime of working, saving and investing, the energy, curiosity, and
in many cases health is gone. Old people can't enjoy their money
and young people don't have any.
The proper incentive
In regards to education specifically, why enrich the parasitic loan
sharks? If it is agreed that everyone should have the education
they are capable of handling, independently of their means, how about
giving incentives to make sure that when it is needed (at the end of
secondary education), the necessary funds will be available, without
turning the student into an indentured servant of the financial
institution for the rest of his/her life?
How to fund higher education
Upon the birth of a child, and every year thereafter until he/she turns
18, a tax credit should be available, equal to
the current cost of a year's tuition and other related expenses at the
most expensive learning institution in the country. After all, a
future Einstein should not be deprived of the best education because he
was born on the wrong side of the tracks.
No debt and no government handouts
This tax credit would be deposited into an education savings account,
usable only for education of the target child. Because the cost
of education is what it is, it is likely that for most people this tax
credit would reduce the tax obligation to zero, especially if multiple
kids are involved. Still, this is less expensive in the long run
than paying interest to a financial institution and becoming an
indentured servant of same, or dealing with the social consequences of
poverty, ignorance, unemployment, crime and welfare.
More than enough money
What would be the implications? For those whose tax burden would
otherwise be equal or larger than the cost of a year's education at the
most expensive university, they would reduce their tax burden by that
amount, and be able to deposit the whole tuition (and other expense
equivalent) into the education account.
Enough money for a PhD
For those that have a tax obligation that doesn't quite reach the level
of the most expensive university, the tax would be reduced to zero and
all the tax that would otherwise have gone to the government would go
into the education account. This means, of course, that most
people would not be able to save as much as it would take to go to that
most expensive university, even if one considers that over the 18 years
the account would be growing and some of the difference would
diminish. On the other hand, tuition costs have only one way to
go: up. Still, 18 years of saving should cover 8 years of higher
education, and that's a PhD.
In the worst cases, such an amount of educational savings would cover
at least a bachelor's degree. In the best cases there would be
money left over after attaining a PhD, and that could be used for
changes in career, dictated by shifts in the economy or personal
And more if necessary
Of course this does not have to eliminate scholarships and grants,
which can be used to supplement the education account if necessary, but
it is likely that the latter will be sufficient for a lifetime of
education and learning.
Too much money?
How would the maximum amount be calculated? To be realistic, this
amount should include not only the tuition, but books, other expenses
and room and board. It is not reasonable to require someone who
qualifies for a Harvard education to remain near the parental household
because room and board are not included.
Keeping the current mix of public and private higher education would
insure that there would be competition and that the availability of
this dedicated money would not cause educational hyper-inflation.
Still, higher education has already been rising much faster than
inflation, but that is another issue for another discussion.
Not education establishment
While it can be argued that this proposal would benefit the higher
education industry, it does not direct any specific amount of money to
any particular institution so strictly speaking it is not educational
welfare subject to political interference. It would directly
benefit the individuals who would get the best education the country
has to offer, for which they qualify; and those individuals would have
all the choices they now have - more actually, since affordability
would be taken out of the education equation.
The accounts could be regulated similarly to IRA accounts, they would
of course be tax free - what would be the point in taxing their growth,
as their whole purpose is to generate the maximum amount for education?
It can be assumed that a lot of people and institutions would be
salivating at the prospects of getting their hands on this money, by
legitimate means or not. As a start, only properly accredited
educational institutions should qualify. Of course, anyone can
see (with appropriate guidance) that the value of a diploma generated
by a diploma mill is not worth the paper it's written on, so
reputations acquired in the marketplace are still useful.
To avoid the effect of some present-day parents not being properly
informed about the use of education accounts, an education account
might be set up automatically at birth and the income tax collected
deposited there automatically instead of going into the general
fund. Thus, every child would have their education funds when
needed even if the parents did (on knew) nothing about education.
But then, what parent wouldn't want the best education for their child,
when it costs nothing additional?
If there are multiple children, how should the money be divided?
Equal parts every year seems the simplest and fairest way. The
earliest child would have a bigger account but would need to use it
earliest. As older siblings reach majority age, the total amount
would divided among fewer children.
Long term consequences
In a generation, this country would have the best educated population
in the world, as only those that don't want to be educated wouldn't
be. If it is accepted, as is by many, that education is the
gateway to eliminating poverty, it is likely that this proposal could
have a major impact on the poor in our lifetime.
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