Sunday, May 7, 2023

School Choice and Tuition Inflation

I graduated from Allegheny College, a medium fancy small liberal arts college in NW PA back in 1979 at a cost of about $4,000/year. My oldest child (VP of an Institute Field Office) graduated from Penn State--a state school-- in 2008 at considerably greater cost. 

The cost of college has ballooned by tens of thousands of dollars for any number of reasons, but a popular culprit among conservatives is federal largesse--that the willingness of government to hand out that free federal and state money has encouraged colleges and universities to just raise their rates in tandem. Really, conservatives have been kvetching about this forever-- here's Bill Bennett back in 1987 calling colleges greedy. Bennett's idea, often tested since then, was not that college tuition hikes were directly caused by aid increase, but that colleges and universities could increase their costs and expand their services confident that aid packages would cushion the blow. Hence the Field Office VP's dorm room with internet, a microwave, and a daily newspaper. 

It's not a theory I'm prepared to argue against. College tuition costs are complicated, and colleges themselves, whether institutions of higher learning, sports businesses with some classes attached, or financial institutions with some classrooms in their portfolio, often defy clear explanation. 

All that aside, it's not hard to get the feeling that working up the mandatory financial aid info package doesn't put one in the position of a used car buyer walking on the lot carrying a huge sign listing just how much he has to spend. 

But it doesn't so much matter if I believe it as much as many conservatives believe it. And if they're right, then why are they not expressing concern about similar inflationary pressures in a school choice ecosystem? Because some evidence of just such a phenomenon has cropped up.

The Diocese of Des Moines is raising tuition rates around 7-10%. This is to increase teacher salaries, they say, as well as hiring more staff and maybe increase programming.

In Dubuque and Cedar Rapids, some hefty increases as well (like 40% in one case). Some of the increases will only apply to Catholic school students who aren't Catholic. KCRG reports:

Phil Bormann, who is the Chief Administrator, for Holy Family Catholic Schools in Dubuque, said it’s seeing a “bump” in enrollment at all levels due to the voucher in an unlisted YouTube video. He also said the school will increase tuition over three years to improve the school because of the funds from the state.

“We’re going to be able to leverage some of those funds to improve programming for our kids to do things that we’ve never been able to do in the past,” Bormann said. “...We’re going to be able to pay faculty and staff, even more, a more just wage. This is something I think we all can agree they absolutely deserve. And so these things are going to come in time, but to get there we’re gonna have to make some adjustments to our current tuition model.”

Iowa has universal vouchers for anyone making less than 300% of the federal poverty level, meaning that many families who have already enrolled their children in private schools and paid tuition themselves will get a sweet kickback from the state. In many cases, the $7,600 education savings account voucher will cover more than the tuition.

So with all this free state money floating around, why wouldn't private schools up the ante-- particularly parochial schools, where the church is providing a subsidy to cover some costs--that means an increase in tuition can mean a reduction in the church's subsidy, which would mean vouchers not just directing money to church-related schools, but to the actual church itself. 

I cannot blame the voucher-accepting schools for not wanting to leave money on the table, but I do expect vouchers to create an education ecosystem mimicking colleges. Parents borrowing more and more money for the "opportunity" they believe the "right school" can give their child (provided that child can get accepted into school). Schools using the available money to expand their programs and offerings or profits. And of course the folks on the bottom of the socio-economic ladder being squeezed out of much of the market--unless they're willing to go in serious debt or settle for getting conned by opportunistic profiteers.

Free marketeers argue that the market will correct itself, and that the "forced funding of government schools" provides less freedom than what they propose. It's a puzzler-- the free market education system that sorts students out depending on what they can afford is somehow supposed to fix the free market system of housing that sorts students into districts depending on what their parents can afford. The injection of government subsidies into the college marketplace has caused distortions and inflation and that's bad, but injecting government subsidies into the K-12 marketplace would be a good thing. Of course, the college market is different because not everyone enters it.

It only makes sense to me if I assume that the through line is to get government out of the education biz, so that the well-to-do don't have to pay taxes to fully finance the education of the poors, replacing it with a free market system in which everyone is on their own, free to get their kid as much education as they can afford to buy, with just enough taxpayer subsidy to take the sting out of it and maintain the illusion of freedom.

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