Using the data and your own economic knowledge, assess the case for financing universities mainly through charging fees to their students.
Charging of fees means that payments will be taken from students instead of receiving subsidies from the government. Education is a merit good as it produces positive externalities (i.e. a better educated workforce that can increase productivity of the society) and is under-consumed as a result. Alternatives to charging fees include government funding, gifting money to university and selling research to commercial companies. There is evidently existence of market failure in education. Extract B, line 1 suggests that universities need more income, and they were finance largely through government
…show more content…
The government uses taxes to subsidize universities and students. In order to achieve this, the government needs higher tax revenue to create money for subsidies.
Graph for Government Subsidies:
However, if government uses taxes to subsidize university students, taxes such as incomes tax will have to increase and this will increase the overall social cost. Furthermore, this will decrease citizen’s disposal income, which will lower their purchasing power and winder economic growth as a whole. There are two other alternative methods, selling research to companies and encouraging donation. However, even in the most successful cases in America, businesses only provide about 1% or 2% of university income. Also, Britain is very different from America and lacks a culture of charitable gifting to universities. Therefore these two methods may not be very effective if applied in Britain. Government subsidies may sound like a beneficial policy, but it will carry some unintended consequences. When the government subsidizes some product, it causes the price to go down and consumption to go up. While this will help university students initially because of the reduction in price, it also has the effect of leading to shortages because universities have limited places. In addition to creating a larger burden on taxpayers, the government will also have to bear opportunity costs of not being able to spend the tax
The justification for government spending on public universities is to promote the competition for higher skilled jobs. In a free market, most people wouldn't be able to afford the training and education required for higher skilled jobs, and more companies would seek to outsource the low skill jobs. This causes a surge in unemployment and a growing wage gap, so the government must step in and provide incentives and benefits to the general population.
This is an issue that affects many people thus there is a multitude of literature on the issues of tax money being used for tuition. The literature ranges from an online to radio and through these mediums will provide the views on this issue. That range from the college and the use of funding from sports to the student.
free tuition more students can dedicate the money they use from their jobs to focus on paying
The hot topic amongst people entering college is student loan debt. With the average debt at tens of thousands of dollars, many people shy away from college, or at least do not get a full degree. As a result, many politicians have preached plans to make college free, and thus bring an end to student loan debt. However, those on the other end of the spectrum find themselves hindered in jumping aboard the free college mania, because, after all, nothing is free, everything comes at a price. And as they soon learned, what a price indeed. In fact, in order for the universities to pay staff and accommodate the student body without tuition being on the shoulders of the students, state taxes would have to be increased on the entire taxpaying population.
There are people however that express the concern of this plan being taken for granted or it not benefiting the state. They believe “paying tuition creates a financial incentive for students to succeed and fear that free education will lead to students taking the benefit for granted”(Jason Rejali). Some of the people that are being taxed more might not agree with this plan and they may feel like their tax money should be used for other things.
To begin with, if the government decided to lower college expenses then the rate of people going to college will have a massive increase. For example, on teenink.com Mattclavette states that “the government needs to fix this. They
strengthen the economy. Often times, if the prices for college are too high and those who had
Should Public Colleges Be Free?” DEBATE.ORG. Web. 29 Feb. 2016. The writer discusses several main reasons to why tuition should be free and it also discusses what would happen to our society if all tuition would be free for students. For example if tuition would be free in college and university than it will most likely have major effect on private school. Therefore the country would most likely go in debt. I found this source very helpful. It is very useful. It is different from the rest of my sources; because this one was a debate and I got to see different perspective of people's opinion and where they stand in the debate section with comments. This information is not 100% reliable. This source is biased. The goal was to get different opinion
College costs have risen above the rate of inflation in terms of college tuition in the United States. Specific financial matters that are affecting students are the burden of student loans. The cost of college tuition is a significant argument today that is impacting not only parents of the students and students, but also the U.S government and taxpayers. Numerous individuals in the government are currently pushing towards free college tuition in the future, but there are still some concerns about whether this idea is the best way to improve access to higher education for those who can not afford college processes. There are two opposing views towards this impact that could affect everyone in the future.
However a case can be made for free tuitions. For example free tuitions can help the economy by making the workforce larger in the long run. As well as giving students opportunities they wouldn't normally have. Additionally it helps students with student loans and debt. While free tuitions can help the economy in the long run, there is no guarantee that the student will stay in college due to the fact that there are no repercussions for dropping out. For example if the tuition is paid by the state you would have less student debt. I do admit however that student debt is bad. But it keeps students in school with hopes of getting a good job. While free tuitions can help with student debt, scholarships can do the same but scholarships are given
Government should control college tuition because they can give out financial aid and help the people who can't afford it. If the government controls tuition costs and keeps it low more people will be able to go to college, and the government will still make money off of it because it is in such high demand. Without the government only rich people could go to college because they couldn't afford the cost. The government can use taxes to lower tuition costs, and just focus on the actual schooling needed instead of too many extracurricular activities at colleges.
Although, a counter-argument to this proposal might be that such an implementation will only negatively influence the economy, the German example serves great purpose in showing the potential for such an application. Jessica McCormick, chairperson of the Canadian Federation of Students, said that “ ‘Canada’s federal government should look to Germany’s system as an example of one of the best ways to ensure access to postsecondary education and ensure students are getting the training and skills they need to participate in the labour market’ “ (Freeman 3). The system works as graduates receiving the education end up paying for the full amount, as well as the next generation, through income taxes over their working careers. Germany has become one of the most prosperous countries in the world, as a result of this implementation in 1971 (“College Access and Affordability: USA vs. the World” 8), currently being ranked fifth in the world in gross domestic product in terms of purchasing power parity (“The World Factbook: Germany” 15), so Canada should look to emulate the same system. Moreover, Canada’s economy would be stimulated as a result of this implementation, leading to further benefit. If students were not in debt, they would be able to spend their money more freely, which would, in turn, promote economic growth. Businesses would receive a larger number of student
It is an advisable to upgrade the present 3.75% flat income tax rate to 6% which will help the state to increase the revenues and thus the finances will be used for students. Formulating a graduated rate income tax will be a step in easing the tax burden from the people who do not have capacity to pay more and those who have will be subjected to it. Sales tax should be expanded to certain services in the state. Corporations should be penalized if they do not pay efficient income tax on their companies. With the implementation of all these steps, the state would be able to increase its revenues exponentially and thus funding the low-income students would be a possible
In recent years college tuition has increased immensely, and it still continues to rapidly increase; therefore, the government needs to regulate government tuition to make college more affordable for students. One potential way that the government can lower the cost of tuition is by offering financial incentives to colleges with low tuitions. By offering these incentives, it would be beneficial for the colleges to lower their tuition. The government should also inspect how colleges spend their federal money and ensure that it is spent effectively. If colleges are wisely spending their federal money on things such as technology to lower future
Before debating on whether increasing tuition fee is unfair to future students, we should keep in mind that the current education system and policy can never benefit everyone. Especially when the competition between universities is a lot more intense nowadays. Increasing the income and value of the school is the priority. If one has no money or resources provided, it is less likely that he or she can be enrolled at a university compared to others. Thus, the