he University of California is not the only public university system dealing with budget issues at the moment. A couple weeks ago, United Kingdom Prime Minister Tony Blair barely survived when a proposal by his government to raise tuition fees for England’s ailing university system slipped through Parliament on what amounted to a near no-confidence vote. Blair’s proposal to raise the maximum fees at England’s system of publicly supported universities (including Cambridge and Oxford) from £1,125 ($2,000) to £3,000 ($5,400) per year faced widespread opposition within his own Labour party, largely because of the party’s socialist roots.
In California, a similar increase in the UC system goes largely unnoticed by the general public because we have a contrasting system of private universities that can leave students far more heavily in debt. The university fees vote nearly triggered a crisis of confidence in Blair’s leadership because of the social shock that paying for higher education presents in England. Many interesting ideas as to how to fund the university system emerged during the debate, some of which might very well be applicable to the California situation.
The pertinent question at hand in the British situation that has not been sufficiently posed in California is: When public universities need money, whose responsibility is it to fund them? This is not just a question of undergraduate education (although that of course is the most tangible result) but also a question of funding research, and recruiting faculty and graduate students who “add value” to the diplomas of UC undergraduates by enhancing the reputation of the university. Should all the people of the state of California, regardless of educational background, bear that cost? Or how about the graduates themselves, since they are the direct beneficiaries of a partially state-funded education?
While the latter might seem the most fair, when confronted with the choice between losing $20,000 a year for several years and making $30,000 a year, how can we guarantee to the poorest of students that a university education will not cripple them financially for years to come, should employment be difficult to come by? Or how about a less appealing case: Should a middle-class student have to drain all of his family’s savings to afford a public education? Should a UC education come down to a question of cost-benefit economics rather than a guaranteed principle?
The most interesting proposals to come out of the British situation confronted that very question. Perhaps the most rational choice would be to face hard facts and eat Ramen for several years while attending school and subsequently paying off loans. As a society, should we predicate the availability of higher education on the rationality of individuals under pressure (for all their talk of lower taxes and individual freedoms, one wonders how the campus conservatives would view the logical extrapolation of their views: complete privatization of the University of California, with subsequently higher tuition)? Of the solutions that placed the burden on graduates, what would be the most psychologically palatable alternative? Is it government-subsidized loans, as the United States often does? Perhaps the most efficient means of allocating funds, loans place a direct burden on students for which they are personally responsible. If the goal is to convince students to feel they can afford higher education regardless of their means, loans seem counter-productive, especially because they start to accrue interest as soon as students graduate regardless of employment opportunities.
How about an extra tax for college graduates in California? The problem is that it would potentially drive away UC graduates from California, which would render the entire question of educating Californians moot. Also, UC graduates would be paying a lifetime of taxes for an education of only four years, which 30 years down the road might create an unsustainable system where current undergraduates depended on untold generations of resentful graduates (somewhat like Social Security, except in that system one grows into benefits instead of out of them).
The new British system instead strikes a gentle balance: Graduates pay the loans back as part of their taxes, at a rate of at least 9 percent of their income every year they earn more than £15,000 ($27,000). Any debts outstanding after 25 years are written off.
As a result, graduates are responsible for paying their way through their own education. Society, however, assumes the cost of their education should it prove to be worthless, and defers payment until the graduate makes enough money to justify the education. It also reinforces the cause and effect of higher education leading to a higher income. This system would be possible in the United States if our loan repayment deferral system required federal tax returns, and deferred repayments were covered by marginally higher tuitions on other graduates of the same class.
In contrast, the federally subsidized Stafford loans in the United States require repayment within 10 years. Payments start almost immediately after graduation, regardless of means. While this no doubt requires personal accountability, it cannot be an appealing prospect for a student facing the decision of whether to burden either his family or himself with the (newly raised) fees for attending the University of California. If our goal is to encourage students of all means that an education is attainable at minimal cost, the university might do well to look to the British. Instead of means-testing everybody by their family circumstances coming into the University of California to determine which rich students will subsidize which poor students, let the most successful graduates subsidize the less successful ones after graduation.
