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SHEPARD: The party conventions and Indiana higher education

June 11, 2016

Shepard
We’re just weeks away from the next stage of the presidential election drama, as the two parties prepare for the debates of the respective platform committees. These deliberations may well affect Indiana’s economic future.

The two most visible propositions of the primary season, possible platform planks if you will, have been the “wall” and “free tuition.” Space being tight, and expanding participation by Indiana’s young people in higher education so important, I examine here just the most prominent domestic policy debate between Bernie Sanders and Hillary Clinton: “Free tuition for all students at public colleges and universities.”

Sen. Sanders speaks regularly about free tuition, especially on college campuses, and invites audiences to go to berniesanders.com for details.

The website describes the Sanders proposal in 140 words. It says there were once many free American colleges and offers up Finland, Norway, Sweden and Germany as existing modern examples.

“Free,” of course, means free to low-income and high-income families alike. Sen. Sanders’ policy director, Warren Gunnels, says subsidizing both the poor and the wealthy is important lest “people complain that it’s just a welfare program” and weaken political support for it.

Tuition-free attendance could draw thousands of new students to Indiana’s colleges, surely a good thing for our state’s future. But the universities’ ability to expand faculty and facilities would depend almost entirely on funding decisions by Congress. Would it send the same dollars for each student at IU-East as for each one at West Lafayette? If Congress instead discriminated between campuses, what basis would it use?

How much is spent on different academic programs at different campuses is now largely decided by Indiana’s Legislature and by university trustees, who juggle multiple income flows like state dollars, tuition and charitable donations. If the basic financial decisions are made by Congress and the Department of Education, however, our legislators, trustees and faculty will have much less authority over education programs.

There is, then, the question of how Indiana’s splendid private colleges could survive if students can go to public universities for free. Unless there were some limit on the number of seats available at the publics, students and their families would seem likely to abandon private colleges by the tens of thousands.

There are practical limits on how many students can attend free in the European countries Sen. Sanders lifts up. Various high-stakes qualifying exams still ration attendance. The result, according to the Organization for Economic Co-operation and Development, is more Americans hold post-secondary degrees or certificates than do residents of Finland, Norway, Sweden or Germany.

The Sanders stump speech says that free tuition should be financed by a tax on “Wall Street speculators.” The proposal is that anyone who sold a stock would owe an excise tax of half a percent of its value. Yes, Michael Douglas and Gordon Gekko would pay some of this, but the 60 per cent of Americans who hold mutual funds in their retirement accounts would pay most of it. Older people who’ve moved to bonds for safety would pay double the rate.

The Clinton position on tuition expands access but is contrary to the Sanders view on just about every point. College should be cheaper, but not free. Families and students should pay less but pay a “realistic” amount. Congress should expand its subsidy of higher ed but only for states that do likewise. And it should be financed by eliminating tax deductions for higher income families.

Between these two visions, the nation would be better served by the Clinton approach.•

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Shepard, formerly Indiana chief justice, now serves as senior judge and teaches law. Send comments on this column to ibjedit@ibj.com.

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