Paying for Higher Education

As a graduating senior, the topic of paying for college is one close to my heart. As August gets closer and closer, there is the constant looming threat of $55,000. College is not cheap, and it is not getting any cheaper. Real costs for college grew 68 percent for students between 1986 and 2006 (McCluskey and Edwards, par. 19). College students' debts have skyrocketed, now overshadowing even credit card debts. Only the Higher Education Act of 1965 is here holding open the opportunities for prospective and future college students, but that, too, will be in jeopardy come 2013. Let us discuss this historical law vital to our future, and let us move to re-enact it in 2013.




What is the Higher Education Act of 1965?


President Lyndon B. Johnson passed the Higher Education Act in 1965 to subsidize higher education nation wide. President Johnson cited his reasons as wanting “educational opportunities for all Americans,” and believing in “the capacity of education to transform people's lives” (Cervantes, et al. 17). Since then, the law has allowed the federal government to give students loans, grants, and tax credits. The amounts dedicated to Pell Grants alone reached  “$9.95 billion in 2001-02” (Maag and Fitzpatrick 11-12). However, while Pell Grants have grown, they have failed to keep up with the inflation of college costs (Maag and Fitzpatrick 12). Nonetheless, Pell Grants are extremely progressive, and the Higher Education Act helps low-income acquire a college education despite the astronomical costs. 


Why should we support it?


It is simple really: externalities. The benefits are well documented in economic literature. Lochner, with his data, shows that .7% of people with some college education earn half their income from crime compared to 1.4% of people who completed high school and 4.2% for those who did not complete high school (10). The reason for this is that educated individuals are more patient, place greater stress on future expectations, are more risk-averse individuals, and have more interaction with other educated individuals (Lochner 8). All these factors help decrease crime within a society, and therefore mitigate the loss of human capital due to crimes and the loss of resources needed to detain criminals.


A more educated populace is also a more politically involved populace which votes more and cares more about the political direction of a nation (Lochner 61-64). Milligan, Moretti, and Oreopoulos have similar findings, reporting that education undoubtedly increases voter registration, voter turn out, and voter knowledge. In fact, Milligan, Moretti, and Oreopoulos find that the probability of voting increases by 28.8 to 34.2 percent  for those who finished high school compared to those who did not (27-28).


Education is a massive boon to the economy, averaging a rate of return of 10 percent per year of schooling (Psacharopoulos and Patrinos 2). An increase in levels of education are also positively correlated with economic growth (Krueger and Lindahl 1102). This makes sense as education is an investment in human capital. Developing human capital is a lengthy, costly process. However, capital pays in the long run by increasing productivity and pushing the production possibility frontier outwards. That is why Governor Arne Carlson, from the great state of Minnesota, stresses the importance of quality higher education, critical thinking, and innovation. Governor Carlson believed that Americans need innovation and critical thinking to compete in the global economy as technology and service sectors take precedence over manufacturing.Re-enacting the Higher Education Act in 2013 helps foster such thinking by sending kids to be trained in critical thinking, so they can become human capital. Not only is this a good investment, but should innovations occur due to higher education, American society as a whole benefits, another great positive externality. These reasons all support re-enactment of the Higher Education Act come 2013.


What can we do?


This is the simple part. Contact your representatives. That is, your representative in the House of Representatives, your Senator, or even your president. Send them an email, a letter, whatever. The contact information for Senators is here, and representatives, here. You can even contact the president here. Inform others. Post a comment. Have a discussion. Remember, this is your future and your children's future at stake here too. Let's take action to ensure their equitable chance at a college education.






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