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The Almighty Buck Education

Financing College With a Tax On All Graduates 597

Hugh Pickens DOT Com writes "As the number of students attending colleges and universities has steadily increased and the cost for most students has climbed even faster, student debt figures (both total and per person) have continued to get bigger. Now Josh Freedman at Forbes Magazine proposes a graduate tax-funded system of higher education, under which students would pay nothing to attend college upfront. Instead, once they graduate and move out of their parents' basements, they would begin to pay an additional income tax (say, for example, three percent) on their earnings that would fund higher education. 'In other words, the current crop of college graduates funds the current crop of college students, and so on down the line. There is no debt taken on by students, which minimizes risk (good); repayment is tied to income, because only people who make income pay the tax (also good); and it is simpler and more easily administrable than plans to make loans easier to pay off (still good).' The main argument for a graduate tax comes from its progressivity. Supporters of a graduate tax point out that most college graduates, particularly those from elite universities that use a greater share of resources, are richer than people who have not graduated from college. The state of Oregon made headlines last year for an innovative proposal called 'Pay It Forward' to fund higher education without having students take on any debt. Pay It Forward amounts to a graduate tax: All of the graduates of public colleges in Oregon would pay nothing up front in tuition but would pay back a percentage of their income for a set number of years. These payments would build a fund that would cover the cost for future students to receive the same opportunity to attend college with no upfront costs. 'As pressure mounts for more students from all backgrounds to attend college, it will become increasingly difficult to try to stem the rapid tuition inflation under a loan system,' concludes Freedman. 'Our current student loan system has made college more expensive, turned higher education into an individual, rather than a communal, good, and generated serious negative economic and social risks.'"
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Financing College With a Tax On All Graduates

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  • Lifers? (Score:5, Interesting)

    by Anonymous Coward on Friday February 14, 2014 @09:08AM (#46244483)

    So under this new system, why would I ever stop going to college? This is already a problem with some of the higher level institutions.

  • by Anonymous Coward on Friday February 14, 2014 @09:13AM (#46244517)

    While debt sucks, it's gives a sense of RESPONSIBILITY and MOTIVATION TO SUCCEED.

    If you know you are paying for college or at least going to have to pay back some of the cost, you tend to be more motivated to at least pass your classes.
    Everyone I knew that got complete a free ride from grants did not feel motivated enough to pass their classes. What did it matter to them? It didn't cost them anything out of their pockets.

  • Bullshit! (Score:5, Interesting)

    by stevegee58 ( 1179505 ) on Friday February 14, 2014 @09:33AM (#46244685) Journal
    How about the federal government and higher education address the root causes that contributed to a 1000% increase in tuition and fees since 1980?
    Low cost federally subsidized student loans are a major part of this problem. It's bad enough that this is a huge overstepping of federal authority. The availablility of billions of dollars of cheap money has fueled the fire of educational hyperinflation. Take away the cheap money - tuitions go down.
    Maybe more people in Congress should go take EC101 again (for the first time).
  • I call bullshit (Score:4, Interesting)

    by XB-70 ( 812342 ) on Friday February 14, 2014 @09:36AM (#46244707)
    The biggest issue surrounding higher education is the lack of oversight of university administration over-spending.

    There is also an enormous trend toward creating universities in towns and cities that are suffering economic collapse just for the sake of optics.

    No one is looking at employment outcomes nor are they looking at job trends. Putting a tax on the lucky few employed graduates to subsidize fat-cat administrators, university contractors and their ilk does nothing to help the ones who need it most, the students.

    Stop this lunacy before it starts.

  • Re:Questions. (Score:5, Interesting)

    by Opportunist ( 166417 ) on Friday February 14, 2014 @09:44AM (#46244779)

    I'm not from the US. I've been paying for students for pretty much all my working life, we already have a rather similar system. With the difference that EVERYONE gets to pay for students. Oddly, nobody complains. Why? Because we know that once these students graduate, they'll earn some decent money and pay a metric ton of tax (*sigh* believe me...) which will in turn pay for their pension, their kids' education and so on.

    In turn it means that everyone, not just whoever can afford it, but EVERYONE can go and study at a university. Which in turn translates to a lot of students, which again means that universities can afford to simply weed out like crazy. The average field has dropout rates way above 90%. What sounds like very dim students is rather a very brutal selection system. They don't carry your ass around because they need your tuition money. Get organized, get your act together or get the fuck out.

    In turn, our universities have a very good rep, nationally and internationally. What comes out of there with a degree is DAMN good. You not only get people who are among the top of their field, they are also experts in organization, information finding (or rather, scrounging), negotiations, project management and a few more things. Or else they'd simply never have graduated.

    To answer your questions:

    Who pays for the students who go to university and don't graduate?
    Who cares if one more person sits in the course? Don't get a seat? Then come in earlier for the next lecture! It's not like you have any right to sleep in.

    What happens with perpetual students?
    If they can afford it, again, who cares? Either they are lazy bums, then they won't waste space in the lectures because they don't want to get up before 7am. Or they're not then they could as well have a job. Either way, get up early if you want a seat!

    What is to stop someone from going to a university until they are one class shy of graduating, moving out of state or even out of the country, and then finishing their degree and never falling under the tax?
    What keeps them from finishing and then moving? Nothing. What keeps you from paying back? Well, the "pay back in full if you bail" clause you have to sign if you want your degree.

    It kinda helps if your country runs the universities, I have to admit that.

  • Easy (Score:4, Interesting)

    by danbob999 ( 2490674 ) on Friday February 14, 2014 @09:45AM (#46244787)
    1. Attend college in Oregon 2. Move to another state/country 3. Profit Since it's a tax, and not a debt, you don't legally owe anything back and you are free to move elsewhere.
  • by ReallyEvilCanine ( 991886 ) on Friday February 14, 2014 @09:46AM (#46244791) Homepage
    Even if institutions are non-profit or not-for-profit, cost have been running amok. Schools are paying outrageous sums to executive staff (but -- surprise, surprise -- not to teachers) and spending money hand-over-fist on projects and buildings and anything else they can think of. As long as this spending remains unchecked the best financing plans in the world can't and won't fix the situation.
  • by Cajun Hell ( 725246 ) on Friday February 14, 2014 @10:06AM (#46244951) Homepage Journal

    Indirection just delays the anger and fear, and keeps it from being expressed. People ought to be seeing numbers-right-now in their faces, getting horrified, and yelling back. Just like with loans, this will make people think, "Oh, I pay later when I'm rich," and suppresses the sticker shock.

    We NEED the sticker shock. And we all (not just students) need to get shocked by it. Because the problem of education isn't who pays and how they pay, but how much you pay for it. The price is totally unrealistic compared to the capital required to provide the service.

  • by HuDongQing ( 824333 ) on Friday February 14, 2014 @10:08AM (#46244969)

    " Since everyone benefits from education, everyone pays a share."

    That's true, but the share shouldn't be 100% - you don't benefit from my education as much as I do, so I should pay more for it than you, right?

    This scheme is called "Income Contingent Loans" and has been used to finance higher education in Australia and other countries since the 1980s. It's excellent from almost any measure.

  • by FirstOne ( 193462 ) on Friday February 14, 2014 @10:13AM (#46245019) Homepage

    Traditional college is vastly overrated and a waste of huge amounts of resources. Most grads don't end up having jobs related to their major [outsidethebeltway.com].

    It's just a matter of time before most classrooms will be replaced by remote learning [ibtimes.com] . Leaving only the lab-work to be completed in some rented facility.

    Instead of trying to find new ways(taxes) to prop up a overpriced, obsolete, low ROI, educational system, we should go forward and cost reduce the whole Enchilada. Deploy a national fibre network to every occupied structure within reason, similar to the old rural electrification act brought electricity to most farms.

    Besides educational aspects of a national fibre network. I will bet their will be large number of societal fringe benefits, reduced travel needs, lower levels of communicable diseases, reduced crime, reduced infrastructure requirements, etc. Remember the benefits that occurred when President Clinton removed SA from GPS sats, that act spawned entirely new industries overnight.

    So don't look at patching up our backwards educational system, go forward into the future.

  • Re:Lifers? (Score:4, Interesting)

    by JoeMerchant ( 803320 ) on Friday February 14, 2014 @10:16AM (#46245039)

    Take a look at European University tuition structures... I believe they are as simple as "paying for it with some taxes."

  • Re:Lifers? (Score:5, Interesting)

    by ShanghaiBill ( 739463 ) on Friday February 14, 2014 @10:33AM (#46245209)

    obvious to you and I, lets see what the actual bill says

    I hope they are careful. Here is another way to scam the system: Arrange your classes so that at the end of your senior year, you are one credit hour shy of the requirement for graduation. Now you have the education, and the transcripts to prove it to prospective employers, but no actual taxable degree.

The relative importance of files depends on their cost in terms of the human effort needed to regenerate them. -- T.A. Dolotta