Thanks to Wikicommons

We all know College is expensive for students…

But spending on campuses may be even more painful for the state governments that fund public universities.

For this reason, global tuitions have been on the rise during this recession.

Students in the United Kingdom have shown the most outrage to these hikes, but American scholars are also feeling the pinch.

Despite the out-cry of students (who are seeing more than their pizza funds at risk) rises in tuition may be the right thing to do.

At least this is what Nobel laureate Gary Becker and author Richard Posner argue:

Charging low tuition to everyone, as public colleges do for residents of the state in which the college or university is located), does not make economic sense; it merely as I said provides windfalls to families willing and able to pay the full tuition. …

This situation presents a case for a virtuous tax increase (raising a fee for a public service is the equivalent of a tax): the increase helps to close the state’s fiscal gap; the burden of the increased tax is borne entirely by the well-to-do; and some of the higher revenue can be used to subsidize students unable to afford the higher tuition.

In other words, the wealthy will go to college whether it is cheap or not, and as most of those in college are better off than the average American why not use tuition as a “tax”.

Posner and Becker note that one section of academia does follow this system as private universities

charge very high tuition (though not high enough to cover all their costs—but they have other sources of funds, such as alumni donations), but grant scholarships or loans to students whose families can’t afford the tuition.

Over at Economix, David Leonhardt agrees but warns that it is important to remember that

there is typically no guarantee that financial aid will keep pace with tuition. If public colleges raise tuition, they will probably have a hard time increasing financial aid to keep pace, given the current troubles with state finances.

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